Manufactured spending to get credit card reward points
By scheng1
@scheng1 (24649)
Singapore
April 17, 2016 3:20am CST
There are some smart people who manage to get free air ticket by the method known as manufactured spending.
They charge to the credit card, and then get the refund through checks.
In this way, they get the credit card reward points, and they use the points to redeem free air ticket.
Most merchants are smart enough to stop this practice after they detect a trend.
I have witnessed a few cases of manufactured spending though these are not intentional on the part of the credit card holders.
A friend put his dad in a private hospital for treatment.
He has to pay the full hospital bill first before he submits the bill to the insurer for reimbursement.
As a result, he racks up a lot of credit card reward points, because there are a number of outpatient visits.
The insurer will pay him in full because he pays very high premium for his aging and sickly dad.
If not for the insurance, he would have to sell his house to pay for the high medical cost.
5 people like this
7 responses
@scheng1 (24649)
• Singapore
17 Apr 16
@jrlcentral I do not use debit cards.
Debit cards do not have the same range of rewards for the users.
1 person likes this
@jrlcentral (2605)
• Roxas, Philippines
17 Apr 16
@scheng1 I havent used any credit cards before. I'd been using debit cards instead. But now I've realized several benefits. :)
1 person likes this
@sunrisefan (28524)
• Philippines
17 Apr 16
Every time you charge anything to your credit card, the credit card company gets a certain percentage from the payment to the merchant so nothing bad with the cardholder charging purchases/payments and paying them in full afterwards to the card company.
1 person likes this
@scheng1 (24649)
• Singapore
17 Apr 16
Manufactured spending is a bit different.
It means that the credit card holders purposely use the credit card to buy something, and then request for a refund from those companies that give manual refund.
They do not even buy anything.
The companies have to pay the credit card companies for the charges, and then issue a refund check.
That is known as manufactured spending.
1 person likes this
@sunrisefan (28524)
• Philippines
17 Apr 16
@scheng1 I see it now. So there goes the bad side when a refund is requested from the merchant because it would come out that there was no purchase at all but the purchase action was already used to earns points. Very clever :)
1 person likes this
@scheng1 (24649)
• Singapore
17 Apr 16
@sunrisefan Yes, it seems clever, but when the amount is large, and many people try to game the system, the merchants will change it.
1 person likes this
@epiffanie (11327)
• Australia
17 Apr 16
Wow! , it boggled my mind how that works.. But glad that your friend din't have to sell house to pay the medical bills..
1 person likes this
@scheng1 (24649)
• Singapore
17 Apr 16
Actually that is very easy.
if the hospital bill is $30,000, he has to pay in full before he can bring his dad home!
The hospital or he will submit the bill to the insurer, and after that he just waits for the check of $30,000.
No loss to him except that he has to wait.
He gains the points for charging to credit card, and uses the points to get rewards.
1 person likes this
@jrlcentral (2605)
• Roxas, Philippines
17 Apr 16
Reward points is one of the benefits of using a credit card. Your friend that mentioned here, has also shown another benefit. In case of an emergency, and you don't have enough cash to pay the hosptial bills. Although he got an insurance refund afterwards, that's normal and deserves the reward points.
But manufacturing expenses is a shrewed way- to say the least- to gain points. That's playing the system.
1 person likes this
@jrlcentral (2605)
• Roxas, Philippines
17 Apr 16
@scheng1 There will always be people who would game any sytem. It happens a lot on online sites that pays.
1 person likes this
@Macarrosel (7498)
• Philippines
17 Apr 16
It's nice to know that this works but I think only for the few cardholders.
1 person likes this
@Morleyhunt (21741)
• Canada
17 Apr 16
There are many who pay for everything they use with a credit card to collect the points. Then they pay one bill at the end of the month.
1 person likes this
@sunrisefan (28524)
• Philippines
17 Apr 16
I think there's nothing wrong with charging purchases/payments with a credit card and earn rewards points for it because as it is, the credit card company has made money as merchant fees.
1 person likes this
