Author Topic: Money orders and manufactured spending  (Read 12460 times)

yoga mama

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Money orders and manufactured spending
« on: November 19, 2014, 02:20:33 PM »
Question for the credit card churners out there.  I am considering buying Visa gift cards (I know they cost a few dollars to purchase) and then using those as debit cards to buy a money order made out to my husband which he can deposit in our checking account to pay the credit card bill.  (As background, we have to buy grocery cards as required fundraising for my son's preschool, but can use those to buy gift cards.  We will use a hotel points credit card to fund the grocery cards to help with an upcoming trip.)  Am I missing something?  I know we will lose the fee associated with buying the Visa cards and the fee for the money orders but these are far offset by the benefits of using the credit card and the grocery card.  I've never used money orders before and just want to be sure there aren't any pitfalls to using them for a deposit to a personal checking account.

arebelspy

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Re: Money orders and manufactured spending
« Reply #1 on: December 03, 2014, 04:16:58 PM »
That should work fine.

It can look suspicious to have large random money orders deposited into your account, especially if it's under the 10k IRS reporting threshold regularly (see: "structuring").

An account like Serve or Bluebird can let you directly deposit those gift cards into an online bank account and then use them to pay your bill or transfer the funds to your regular account.

But yes, money orders will work fine as you describe.
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arebelspy

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Re: Money orders and manufactured spending
« Reply #2 on: December 03, 2014, 04:23:31 PM »
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

milesdividendmd

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Re: Money orders and manufactured spending
« Reply #3 on: December 04, 2014, 12:16:17 AM »
Thanks ARS,

I will be writing a detailed post on money orders do's and dont's as part of my miles game deconstruction series which is ongoing.

One point worth mentioning is that you probably should not deposit money orders into a bank account that you care about. It is worth opening up a separate bank account just to deposit money orders (and then transfer them to your main bank account.)

The best banks are banks that allow you to do mobile deposits of money orders.

I use UFB BANK but here is a nice list of other banks that have this functionality.

http://www.flyertalk.com/forum/manufactured-spending/1545203-banks-allow-money-order-deposits-via-smartphone-atm-3.html

Enjoy.

milesdividendmd

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Re: Money orders and manufactured spending
« Reply #4 on: December 10, 2014, 12:16:52 PM »
As promised here is my post on the dos and dont's of manufacturing spending with money orders.

http://www.milesdividendmd.com/miles-off-ramp/

Enjoy.

more4less

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Re: Money orders and manufactured spending
« Reply #5 on: December 10, 2014, 07:34:36 PM »
MilesDividendMD, is there a limit for manufactured spending per month? Well, besides 10k per month per bank account deposit?

milesdividendmd

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Re: Money orders and manufactured spending
« Reply #6 on: December 10, 2014, 08:19:39 PM »
More4less,

Yes and no.

There are people who will churn their whole credit line on multiple credit cards multiple times a month by paying off their balance after each purchase.

Such aggressive spending can get your account frozen for "perk abuse" which closes down future miles earning opportunities.

My own rule is that I manufacture no more than 5k per month per credit card, and no more total than my monthly salary.

I think of manufactured spending as a way to offset all of my spending with credit card spending.

But such rules are arbitrary. And each person must decide their own comfort level for themselves.

yoga mama

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Re: Money orders and manufactured spending
« Reply #7 on: December 11, 2014, 10:32:17 PM »
Thanks for sharing this info.  I've just obtained a Target Red Card and plan to use that for any MS I do, so skipping the money orders for now.

milesdividendmd

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Re: Money orders and manufactured spending
« Reply #8 on: December 12, 2014, 12:17:01 AM »
Nothing simpler yoga mama. You picked a great prepaid card. Free and easy MS is an awesome thing.

Have fun!

PhillyWill

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Re: Money orders and manufactured spending
« Reply #9 on: December 17, 2014, 03:17:43 PM »
     After reading this thread (and several others on the subject) I decided to give this method a shot. However, upon reviewing the rewards policies of my current cards (AMEX Blue & PNC Cashbuilder right now) I found that they both specifically list purchases of cash equivalents as non-eligible for rewards.
     Has any of you successfully earned rewards on purchases of cash equivalents with a card that has this stated policy (in other words, can they really tell that I bought a money order at Wal-Mart)?

milesdividendmd

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Re: Money orders and manufactured spending
« Reply #10 on: December 17, 2014, 03:36:37 PM »
You don't buy money orders with your credit cards, you buy gift cards, then use the gift cards to buy money orders.

And yes I have successfully done this hundreds of times and never had a problem with the credit card company.

PhillyWill

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Re: Money orders and manufactured spending
« Reply #11 on: December 18, 2014, 08:42:03 AM »
You don't buy money orders with your credit cards, you buy gift cards, then use the gift cards to buy money orders. 

And yes I have successfully done this hundreds of times and never had a problem with the credit card company.

Does the rewards policy for any of your cards contain language similar to this:
 ...The term “Net Purchases” does not include (A) interest, annual membership fees, non-qualifying balance transfers, transactions made at a financial institution (such as purchasing gift cards, money orders, traveler’s checks or making loan payment)...
source: (https://www.pnc.com/content/dam/pnc-com/pdf/personal/CreditCards/cashbuilder-rewards.pdf)

     This language seems to place gift cards & money orders in the same category, but your first point is taken. My question is whether the rule listed above is actually enforceable if we buy our gift cards from Wal-Mart or the corner bodega instead of a bank. Either way, I guess there's no harm in trying!

neo von retorch

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Re: Money orders and manufactured spending
« Reply #12 on: December 18, 2014, 08:59:50 AM »
Does the rewards policy for any of your cards contain language similar to this:
 ...The term “Net Purchases” does not include (A) interest, annual membership fees, non-qualifying balance transfers, transactions made at a financial institution (such as purchasing gift cards, money orders, traveler’s checks or making loan payment)...
source: (https://www.pnc.com/content/dam/pnc-com/pdf/personal/CreditCards/cashbuilder-rewards.pdf)

I think the important part there is the location (type of institution, retail vs financial), not what you buy. (It merely says "such as.") While you can buy "financial" gift cards at a retail institution, that's not what this language refers to, fortunately :)

milesdividendmd

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Money orders and manufactured spending
« Reply #13 on: December 18, 2014, 09:04:40 AM »
The bodega isn't a financial institution!

Some banks used to sell gift cards, which that clause covers.

When you purchase a gift card at a drugstore, the credit card Company does not get the information about what you purchased. They simply know where you purchased it, when you purchased it, and for how much.

it's impossible to say what will happen next week or next month in the manufactured spending game, but I can tell you that for over a year I've purchased hundreds of thousands of dollars of gift cards and have never been charged A cash advance fee.
« Last Edit: December 19, 2014, 01:34:06 PM by milesdividendmd »

FarmerPete

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Re: Money orders and manufactured spending
« Reply #14 on: December 18, 2014, 02:00:30 PM »
If you are worried, start small.  Don't run out and buy $5000 worth of gift cards first day.  Buy 1.  Churn it.  Wait.  Repeat.

RecoveringCarClown

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Re: Money orders and manufactured spending
« Reply #15 on: December 19, 2014, 12:29:14 PM »
I am about to embark on some man-spend and want to use it to pay my mortgage.  If I am understanding everything correctly, the most efficient and safe method is to buy Visa gift cards at $500. each and then use a couple of those to buy a money order to then send to my mortgage holder.

Is there anything that I am missing?

MustachianAccountant

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Re: Money orders and manufactured spending
« Reply #16 on: December 19, 2014, 12:59:41 PM »
I am about to embark on some man-spend and want to use it to pay my mortgage.  If I am understanding everything correctly, the most efficient and safe method is to buy Visa gift cards at $500. each and then use a couple of those to buy a money order to then send to my mortgage holder.

Is there anything that I am missing?

Yes. Just deposit the Money Orders in your bank account and pay off the credit card that you bought the gift cards with. Exact same effect.

surfhb

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Re: Money orders and manufactured spending
« Reply #17 on: December 19, 2014, 01:12:44 PM »
I'm intrigued   

Can I ask how much one saves/makes a year doing this?     What about paying rent this way?

arebelspy

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Re: Money orders and manufactured spending
« Reply #18 on: December 19, 2014, 01:33:09 PM »
I am about to embark on some man-spend and want to use it to pay my mortgage.  If I am understanding everything correctly, the most efficient and safe method is to buy Visa gift cards at $500. each and then use a couple of those to buy a money order to then send to my mortgage holder.

Is there anything that I am missing?

The easier and cheaper thing to do is to skip the money order step.

Load the gift cards to Serve or Redbird, and use that to pay the mortgage.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

neo von retorch

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Re: Money orders and manufactured spending
« Reply #19 on: December 19, 2014, 02:13:17 PM »
@arebelspy You've got me interested in using Serve, but I'm kind of new to all this, so, I have a question or two.

For example, according to this (http://cashcowcouple.com/travel/american-express-serve-prepaid-review/) you can simply load Serve from a credit card AND get points.
Quote
American Express credit cards will not earn miles/points when used to load Serve online. However, this is not an issue with the other major credit card issuers including Citi, Chase, Barclay, Capital One, and all others that I know of.

Is that the case, currently, and when you do this, does this actually count as a Purchase for your credit card, rather than a Cash Advance?

If that does not work, you have to buy a "Vanilla Visa" and take it to Family Dollar to load your Serve card?

arebelspy

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Re: Money orders and manufactured spending
« Reply #20 on: December 19, 2014, 02:19:44 PM »
Yes,you can directly load Serve with a CC, 1k/mo.

Most CCs tag it as a purchase, very few have it as a cash advance.  Basically all the good credit card hacking ones work.

That is a way to skip even the gift card fees.  But it's a low limit (Redbird is higher, if available in your area).  If you need more, you can do both that plus load gift cards (2.5k/day for a max of 5k/mo on those).
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

neo von retorch

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Re: Money orders and manufactured spending
« Reply #21 on: December 19, 2014, 02:27:53 PM »
Redbird = Target Red Card? The debit card or the credit card version... ? At Target.com it doesn't talk about any of the "load it up" options. I'm confused by my Google searches!

I think $1k / month is plenty... for now.
« Last Edit: December 19, 2014, 02:58:53 PM by neogodless »

arebelspy

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Re: Money orders and manufactured spending
« Reply #22 on: December 19, 2014, 02:49:45 PM »
Redbird = Target Red Card? The debit card... ? I'm confused by my Google searches!

I think $1k / month is plenty... for now.

Yeah, sorry, the Target Red Card.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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neo von retorch

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Re: Money orders and manufactured spending
« Reply #23 on: December 19, 2014, 03:04:54 PM »
http://frequentmiler.boardingarea.com/2014/10/06/the-target-prepaid-redcard/

This helps a lot. It's NOT the debit OR the credit card... it's a third kind, prepaid.
Lots of functionality - https://amex.serve.com/prepaidredcard/?ref=sr_shorturl_prepaidredcard

So you have to go to a Target and see if they have them - buy/get one and then register it and do all the things. There might be a store within a few hours of me... in Virginia. None too close, though.
« Last Edit: December 19, 2014, 03:12:06 PM by neogodless »

arebelspy

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Re: Money orders and manufactured spending
« Reply #24 on: December 19, 2014, 06:04:16 PM »
http://frequentmiler.boardingarea.com/2014/10/06/the-target-prepaid-redcard/

This helps a lot. It's NOT the debit OR the credit card... it's a third kind, prepaid.
Lots of functionality - https://amex.serve.com/prepaidredcard/?ref=sr_shorturl_prepaidredcard

So you have to go to a Target and see if they have them - buy/get one and then register it and do all the things. There might be a store within a few hours of me... in Virginia. None too close, though.

Think of it as an online bank account that you load at a Target with your credit card.  Then you use the account to pay your bills.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

flashpacker

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Re: Money orders and manufactured spending
« Reply #25 on: December 20, 2014, 01:20:07 AM »
Just confirming that the Target Prepaid is awesome. My state doesn't have it yet but I bought it while on a trip in another state and have no issues loading it in my own state at Target stores that don't sell it yet.

chasesfish

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Re: Money orders and manufactured spending
« Reply #26 on: December 20, 2014, 06:41:29 AM »
I'm reading this and am intrigued since I spent two week-long vacations in Hawaii five years ago back when you could churn spend with dollar coins.

Where/who is allowing you to buy a money order with a Visa Gift Card?  I'm in banking and see two points of deterioration:

1) What are the fees when you purchase the Visa Gift Cards and what increments do you need to buy them in?  Doesn't every please have a charge for these?

2) Who would allow you to buy a money order with a Visa Gift Card?  That seller of the money order has to absorb the interchange fee.   

I'm intrigued...looking forward to seeing some more

arebelspy

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Re: Money orders and manufactured spending
« Reply #27 on: December 20, 2014, 09:20:34 AM »
I'm reading this and am intrigued since I spent two week-long vacations in Hawaii five years ago back when you could churn spend with dollar coins.

Where/who is allowing you to buy a money order with a Visa Gift Card?  I'm in banking and see two points of deterioration:

1) What are the fees when you purchase the Visa Gift Cards and what increments do you need to buy them in?  Doesn't every please have a charge for these?

2) Who would allow you to buy a money order with a Visa Gift Card?  That seller of the money order has to absorb the interchange fee.   

1) I typically pay $2.95 per $500 card.  Some pay a dollar or two more.  Depends on where you buy it.  AAA right now is having a deal where you can buy them with no fee, but that's very time limited.  Typically yes, you pay a few dollars to MS.  You can buy them in any increments, but since it's a flat fee it makes sense to buy it in the largest increment you can (usually $500) so the fee as a percent of the MS shrinks. 

2) Any place that sells money orders.  The gift cards you want to buy are debit cards, with a PIN.  Any place that accepts debit cards will accept the gift card.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.