Back in the olden days, signing up for bonus and then canceling the card just to do it all over again with another offer was a revolutionary concept. Some of us have stumbled across this idea on our own many years ago (like yours truly), others heard it from a friend or read about it on the internet. It seemed too good to be true, right? But it was for realz.
Over the years this hobby has changed tremendously. With introduction of manufactured spending and tightening of bank rules, many have shifted their strategy away from sign-up bonuses. Additionally, bloggers started getting paid when hobbyists used their affiliate credit card links.
Not surpsingly, it drastically affected miles and points environment and contributed to aggressive nature of advertising you get to witness on a daily basis. Many became disillusioned with often misleading and self-serving advice. I won’t go into details as I’ve discussed this topic many times. I will only say that things are much more complex than they are presented at times. There is no “black and white” when it comes to miles and points blogging.
Does all of this mean that credit card bonuses are no longer a good deal and just something only simpleton people pursue? Absolutely not! They were a good deal 15 years ago, and they are still a good deal today, a better deal, in fact. I’ve mentioned before that my first card came with 10,000 miles and had a $95 annual fee, NOT waived. I needed to top off my account for an award ticket to Hawaii, and this was the cheapest/easiest way to do it.
There is no question that bloggers (including me) are motivated by incentives. Most people hope to get paid for their work, apparently, also a revolutionary concept for many in this hobby. That said, I view readers as human beings rather than cattle I can milk for affiliate commission.
Image courtesy of xedos4 at FreeDigitalPhotos.net
The fact remains that sign-up bonuses are the easiest and cheapest way of acquiring enough points for a family vacation.
But don’t take my word for it. Do an informal poll on Twitter or Facebook and ask folks what’s the simplest way of obtaining 50,000 miles. I doubt anyone will tell you that it’s through buying and liquidating 100 Visa gift cards. Sure, churning includes risks, like overspending and getting in debt.
But manufactured spending involves risks too, like losing the card (s), method of liquidation going bust etc. It can be lucrative, no doubt. But it’s not as easy as folks make it out to be.
Let me give you an example. We live in a small town with one grocery store and one CVS. I had success with buying Visa gift cards at a drug store, but it involved waiting for manager to show up, then signing my name in a journal. It’s not something I want to go through on a regular basis. I didn’t buy the card to cash it out, but rather for everyday usage.
My one experience with trying to buy Visa gift card at Winn-Dixie was a major bust. Once again, we had to wait for manager who had to take record of my driver’s license. Then they couldn’t get the transaction to go through. Finally, when everything was resolved, my bank put a fraud alert since I don’t normally buy $500 worth of groceries. Thank goodness, I was there in the morning, so the store was empty.
Now let’s talk about liquidation. The most common method right now is to buy money orders at Walmart. There is always a line at my store, so that’s wasted time. Also, my husband works at the bank where we have all of our accounts. If I regularly came with a money order deposit, it would look weird and potentially backfire when it comes to his employment. Do I really want this sort of thing for a few points? Of course, I could always get an account at another bank, but that’s extra hassle.
Not to mention, most of the time, MS costs money, while chasing after sign-up bonuses does not. Sure, there is a risk of spending more than you otherwise would. But assuming you are disciplined with finances, you are simply buying things you normally would anyway. Now compare it to manufactured spending. Usually, you’ll pay $5 to buy $500 Visa gift card and around 80 cents for a money order to liquidate it. So, right there you are paying close to 1.2 cents per point, plus your time.
MS can be a great deal
This is where I defend the opposite side. Take Wells Fargo Visa Signature card. Here are the details of the offer:
- Earn 5x points on gas, grocery, and drugstore net purchases for 6 months, and 1x on all other net purchases.
- Receive 50% more value when you redeem for airfare through GoFarRewards.wf.com. For example, 30,000 points is currently a $450 value toward airfare redemption or a $300 value toward cash redemption options.
- Enjoy dozens of privileges reserved for Visa Signature cardholders, including luxury hotel benefits, complimentary concierge service3, travel offers and protections and more.
If you are someone who has easy access to purchasing Visa gift cards at a grocery store/drug store, this card can be very lucrative. If you are looking to redeem for airfare, value proposition is even better. Let’s say you spend $6 all-in to buy and liquidate a $500 Visa gift card. That $6 will potentially give you $37.50 towards airline tickets, a profit of $31.50. A good deal? You bet!
Make a daily trip to grocery store plus CVS, and you will have $63 airfare credit to show for it. If you do it for six months, you’ll have $11,340 in airfare credits. Don’t need that many flights? There is always an option of cashing the rewards out, albeit at less lucrative rate.
It doesn’t appear that there is a minimum redemption level when it comes to airfare, according to terms:
“Flights must be redeemed through Go FarTM Rewards. For airline ticket redemptions, the number of points required to be redeemed is equivalent to the ticket costs divided by 0.015, rounded up to the nearest whole point. Points comparison is based on Go FarTM Rewards cash redemption options, where the number of points required to redeem is equivalent to the ticket cost divided by 0.01. Cash redemption options must be redeemed in $25 increments (currently 2500 points).”
But the thing is, most normal families are not going to bother. Not to mention, many of us are not comfortable with the idea of manufactured spending. Cashing out Visa gift cards is against the rules which are explicitly stated on the card itself.
BTW, Wells Fargo Visa Signature card used to pay me commission, but I didn’t feel that highlighting it was the best use of my time. Ironically, now that it gives me zero incentive, here I am, writing about it! Blogging is about delivering appropriate content for your unique readership. My target audience involves busy families who (presumably) don’t like to jump through hoops.
I know many of you have jobs working 50-60 hours per week, side businesses, kids and more! There is no question that for some, the juice is worth the squeeze when it comes to Wells Fargo Visa Signature. Well, at least for 6 months. For most of us, it’s easier to obtain miles and points through sign-up bonuses.
You don’t have to choose
When I see “MS is better than churning” argument, my counter-argument is: Why not do both? Getting Wells Fargo card doesn’t preclude you from signing up for various bonus offers. Just use WF Visa for your manufactured spending and the other card for your normal everyday expenses. You’ll still need to pay other bills, so just channel them towards sign-up bonuses. Why does it have to be one or the other?
Occasionally, it makes sense to pay fees in order to obtain an unusually lucrative bonus like the recent Amex Platinum deal. I just took advantage of Plastiq( my referral link, feel free to post your own) service because my power company doesn’t accept American Express. The process couldn’t be simpler and the payment posted within 6 days.
Yes, I paid $7 in fees (2.5%), but I also earned 1 Membership Rewards point per dollar and got closer to getting my bonus. I strongly recommend you look into it for paying your mortgage or other bills that can’t be covered with a credit card.
Regardless, my argument was never that you are crazy to do manufactured spending. It’s that you are not crazy not to.
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