Walmart Money Orders: Adventures in Manufactured Spending

Walmart Money Orders: Adventures in Manufactured Spending

In general, I don’t shop at Walmart.

Sure, the prices are cheap, but so is the quality of most of the goods. Plus we don’t buy much stuff anyway given our relatively minimalist lifestyle.

So why did I go to Walmart earlier this week?

Well, I went to Walmart for one specific reason: manufactured spending.

It’s the very first time I’ve ever went to Walmart for this specific purpose, so I decided to share my experience in this post.

But first, what exactly is manufactured spending?

 

Basics of Manufactured Spending

Simply put, manufactured spending is the process of spending money on credit cards (and earning points), then converting that money into cash to pay off the credit card.

A typical scenario would be something like this:

• Purchase five $200 fee free Visa or MasterCard debit gift cards at Staples.
• Use debit gift cards to buy a $1,000 money order.
• Deposit money order in bank.
• Use deposited money to pay off your $1,000 credit card bill.
• Rinse and repeat.

If you have a credit card that earns 5x points at office supply stores (like the Chase Ink Business Cash), then your end result would be earning 5,000 points for the mere cost of purchasing a money order.

I don’t know about you, but getting 5,000 points for next to nothing sounds like a fantastic deal.

 

How I Earn Points

I earn the majority of my credit card points from sign up bonuses. It’s by far the easiest way to rack up a ton of points.

The other way I earn points is through spending on specific bonus categories. For example, I use my Citi Prestige card for all spending on restaurants and airfare to earn 5x Citi Thank You points per dollar. I use my American Express Blue Business Plus (referral link) to earn 2x Membership Rewards points per dollar when I pay my taxes. And I earn 5x Chase Ultimate Rewards points when I use my Chase Freedom (referral link) for specific rotating bonus categories throughout the year.

For all other purchases, I buy Visa or MasterCard gift cards at Staples using my Chase Ink Business Cash card every time there is a promotion. Every so often there is a promotion in which there is a rebate or the fee is waived. I then use these gift cards for all other purchases that we make. This is exactly how I am able to get more than 5% back on all of our lifestyle expenses. It works beautifully because there happens to be a Staples store within a few miles from my home and another one very close to where I work. When there’s a sale, I’m able to easily nab them. If the fee is waived, I’m essentially earning points for free. And if there is an instant rebate on the gift cards, then I’m earning points while making a small profit.

 

Do I Manufacture Spend?

In a sense, strategically buying gift cards with the intention of paying for living expenses is a form of manufactured spending.

Going the “purchasing gift cards to buy money orders then depositing them as cash” route seems like an ethical gray area in my opinion.

Paying for living expenses and earning points in the process is one thing. But earning points through gift cards -> money orders -> cash without paying for anything (basically for free) just doesn’t seem right to me.

So I’ve never ventured to do it.

At least not before this week.

 

A Word of Caution

To be clear, this form of manufactured spending is not illegal. A lot of people in the points and miles community do it. But there are definite risks involved.

If performed on a large scale, it raises red flags for suspicious activity which can ultimately result in the bank shutting down your account. And if you structure deposits in a way that avoids any reporting requirement, you can go to jail for structuring, a very serious crime. For more on manufactured spending, check out this complete guide.

That said, some people are notorious for using the “gift card and money order” manufactured spending technique to generate as many as 60,000 points a month.

This is definitely NOT something I would do, though.

First of all manufactured spending at this level can consume a lot of time which doesn’t make a lot of sense when you have a demanding full time job and want to spend as much time with your family. Additionally, the fees can really add up. And finally, I definitely don’t want to raise any red flags.

To me, the points are not worth the hassle or the trouble.

 

Gift Cards on Sale

So what happened the last few weeks?

Let’s just say I ended up buying more gift cards than I can spend.

From 4/21/19-4/27/19, Staples had a promotion where you could buy $200 MasterCard gift cards without an activation fee. And from 5/5/19 to 5/11/2019 Staples had the same promotion for Visa gift cards.

I’m used to seeing these promotions every other month. And usually they are all sold out or there’s only a few gift cards left.

Anyways, during these two promotional weeks, there happened to be plenty of fee free gift cards in stock. I also happened to charm the cashier to ring up each card in separate transactions. (During these promotions, there was a limit of one per person.)

In totally, I was able to buy ten $200 gift cards for free (without a fee). By spending $2,000 at an office supply store with my Chase Ink Cash card, I earned 10,000 Ultimate Rewards points.

As I mentioned earlier, I ordinarily use these gift cards to pay for my family’s lifestyle. The past few weeks I was able to spend a few hundred dollars on our usual expenses, but $2,000 is way more than what we are typically used to spending.

 

What to Do With So Much Money?

Having more than a thousand dollars tied up in gift cards made me somewhat uneasy.

What if I lose some or all of these cards? Why have so much “cash” laying around idly when it could be invest and potentially generate even more money?

Because of this uneasiness, I decided to enter my ethical gray zone. Yes, I decided to try to liquidate some of my gift cards into money orders to deposit into my bank.

Based on research from flyertalk (which is basically a forum for points junkies and analogous to Bogleheads forum for index fund junkies), it looked like the easiest way for me to liquidate my gift cards at a Walmart money service center.

Some Walmarts allow you to buy money orders using debit cash cards. Your miles may vary depending on the store and even the cashier. The fee is only $0.88 and there is a limit of four debit swipes per transaction.

 

My Trip to Walmart

With this knowledge in mind, I decided to try it out.

Fortunately, there’s a Walmart across the street from where I work which makes it super convenient.

Knowing that there is a limit of four debit swipes per transaction, I brought four $200 debit gift cards.

I walked into Walmart, gave a friendly smile and “hello” to the greeter, then walked directly toward the Money Services center. I didn’t want to waste any time. Luckily it was close to the entrance, so it was easy to find.

After flashing a friendly smile to the cashier at the money center, I asked to purchase a $800 money order using four separate debit cards. She entered the amount that I wanted and asked me to swipe the cards individually. Afterward, a money order was printed along with a receipt and she gladly handed me both and wished me a great day.

It actually worked!

Even though it’s perfectly legal, I still felt like I was getting away with highway robbery.

I then proceeded to drive a few miles to my local bank and deposited the money order into my account.

The net result of all this is earning 4,000 Ultimate Rewards points (equaling to $40-80 depending how you value these points) for a measly $0.88 money order purchase fee.

 

Final Thoughts

Manufactured spending using gift cards and money orders is one way to earn a lot of credit card points.

Having done it once, I’m shocked to find out just how ridiculously easy it is.

Of course, I have a favorable environment for it to work well:

• I have the Chase Ink Business Cash card which earns 5x Ultimate Rewards points at office supply stores.
• There is a Staples within a few miles from my house and another close to work, which makes it convenient to take advantage of promotional gift card sales.
• The Walmart across the street from my work accepts debit cards for money order purchases.

Given these conditions, it would be relatively easy to scale up my manufactured spending efforts for maximal profit and points.

But for me, it still feels like an ethical gray area and I don’t think it’s worth the trouble. Because of this, I’m not going to do it.

For now, I’m just going to stick with using gift cards to pay for our relatively frugal lifestyle. 🙂