Overview
This is a guide to manufactured spending / churning, primarily focused on an (app) where iykyk. But first let’s establish, what is manufactured spending / what do you get from it?
What is it?
The first is to establish the premise of manufactured spending, which is on the idea of credit cards.
Credit cards offer two large things:
SUBs (sign up bonus) where if you spend a certain amount of money in a certain amount of time, you get a bonus in points or cash
Points/Cash back for spending - such as maybe 3x back for dining so-on.
The problem is that not everyone can “organically spend” some of the amounts that the credit cards require. So through manufactured spending, we are essentially creating the required spend to get the rewards. Rinse and repeat (churning) and these rewards basically can make your future travel free.
Why do it?
To travel for free. I used to think that I need to be super rich to fly all the time, and get decent hotels. Every time I do, it’s a drain on my cash reserve, and this is something I need to constantly save up for. But with this, you essentially can minimize your travel expenses by a huge factor by churning credit cards and generating credit card points.
Is this Legal?
Yes, here is an article of How One Couple Manufactured $300,000 in Cash Back -- and Won a Case Against the IRS. There have also been other instances such as for example, the Federal reserve used to sell a penny for a penny, where people bought a load of them and just redeposited it back to the bank to generate points on their credit card. Or where people buy Costco gold bars, not just as an investment, but also to immediately sell back to a gold buyer.
Now, will companies want to continue to work with you - is a different story - as all companies have the right to refuse to do business with you. But this is why manufactured spending is built on tons of data points such as this (reddit) where you establish what works and what doesn’t.
Is this taxable? Credit card points / cash back are consider rebates, and thus non taxable.
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