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re: How to make $300k arbitraging credit card points and then pay zero taxes on it
Posted on 5/1/24 at 11:49 pm to Pezzo
Posted on 5/1/24 at 11:49 pm to Pezzo
Some interesting takes in this thread...As someone who has been known to dabble in manufactured spending, I would be willing to bet there are people out there who are making $300k profit in a year. That said, the story in the OP is suspect (at least in how it was told). Doing that kind of volume in just happenstance supermarket gift card purchases while buying groceries would be near impossible.
These days, it's all about "couch" manufactured spending. A decent bit of in person spend still takes place, but it is time consuming and difficult to pull off in high volume. Plus, as noted, the chance of issues increases with stolen cards, employees thinking you're stealing/doing something illegal/etc. Not worth it to me.
On how profitable it can be, there are three key factors - volume, spread, and time required. Volume is pretty self explanatory, and a husband/wife team with good credit and income can generate a whole lot of spend. The manufactured spending whales out there scale up and manage accounts for parents, siblings, etc.
Spread is the rewards/cash back vs cost. Spending with category bonuses, authorized user bonuses, sign up bonuses, referral bonuses (anyone looking to sign up for an Amex card?) increase your earn. There are various ways to minimize costs...and people keep the best options very quiet.
Time is pretty manageable with a lot of the virtual MS options. I spend more time planning and tracking than the actual act of spending.
And in general, you'd be surprised of the things banks let you get away with pretty much indefinitely if you don't make the mistakes that will get you on their radar. Citi for example does not want you cycling your credit, other banks don't care at all or don't care as long as you don't go crazy with it.
These days, it's all about "couch" manufactured spending. A decent bit of in person spend still takes place, but it is time consuming and difficult to pull off in high volume. Plus, as noted, the chance of issues increases with stolen cards, employees thinking you're stealing/doing something illegal/etc. Not worth it to me.
On how profitable it can be, there are three key factors - volume, spread, and time required. Volume is pretty self explanatory, and a husband/wife team with good credit and income can generate a whole lot of spend. The manufactured spending whales out there scale up and manage accounts for parents, siblings, etc.
Spread is the rewards/cash back vs cost. Spending with category bonuses, authorized user bonuses, sign up bonuses, referral bonuses (anyone looking to sign up for an Amex card?) increase your earn. There are various ways to minimize costs...and people keep the best options very quiet.
Time is pretty manageable with a lot of the virtual MS options. I spend more time planning and tracking than the actual act of spending.
And in general, you'd be surprised of the things banks let you get away with pretty much indefinitely if you don't make the mistakes that will get you on their radar. Citi for example does not want you cycling your credit, other banks don't care at all or don't care as long as you don't go crazy with it.
This post was edited on 5/1/24 at 11:51 pm
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