The Travel Hacking Experiment: Part III

Downtown Belize City

If you’ve been reading the blog, then you know that back in March I embarked on a travel hacking experiment. For the uninitiated, travel hacking refers to signing up for credit cards to get the huge sign-up bonuses and then using those bonuses to travel for free/cheap.

Of course, you should NEVER do this unless you already have a healthy relationship with credit cards. This is a high level move only to be executed by people who have already gotten the big financial wins.  That being said, let’s review the rewards I’m after in this experiment.

As noted last time, here are the cards I ended up getting back in March:

  • Citi AAdvantage Visa – Sign up bonus of 50,000 AAdvantage points after spending $3000 in the first 3 months.
  • American Express HHonors Card – Sign up bonus of 50,000 HHonors points after spending $750 in the first 3 months.
  • US Airways Premier World Mastercard – Sign up bonus of 50,000 Dividend Miles after your first purchase and paying the $89 yearly fee.
  • British Airways Visa – Sign up bonus of 50,000 Avios points after spending $2000 in the first 3 months.

If you’re paying attention, you might have noticed that, since it’s July, the time for reaching the spending limits has passed.  I’m happy to report that I met the requirements for all the cards, and all of the above rewards have already posted to my various reward program accounts.

In fact, the Dividend Miles had already been converted to AAdvantage points as of the last post, which is great since I mostly fly American Airlines.

The real questions are:

  1. Did I use any manufactured spending?
  2. What am I going to do with the rewards?

First, let’s talk about manufactured spending.  As noted in this post, manufactured spending refers to moving money around to trick banks into thinking you are spending money on your credit cards.  As far as I can tell, this involves buying gift cards with your credit card, using the gift cards to fund a pre-paid bank card, and then using the pre-paid bank card to pay your credit card bills.

Since this experiment took place right after we bought our house, I ended up naturally spending all of the money for the minimum spending requirements except two hundred dollars.  So, as seen in this expense report, I just bought a $200 Amazon gift card, because I know I’ll use it eventually.

However, I do have a few things to say on the subject of manufactured spending.  After all, I read a lot about it and figured out a few useful things in the process.  I won’t bore you with all the details but here are the most useful takeaways.

Manufactured spending takes a lot of legwork.

Credit card companies know that people do this and, of course, they don’t like it.  This means that most mainstream ways of achieving manufactured spending only work for about a year or less.

Essentially, people find a loophole to make manufactured spending work and while only a few people are doing it, it continues to work.  But as soon as a lot of people start doing it, the credit card companies get wise and close the loophole.

There are two big implications here.  The first is that it is hard to find a reliable way to get manufactured spending via the internet, because most people don’t want to share their secrets.  And who could blame them?  As soon as the masses start using it, it will quit working.

The second is that even if you find a good way to produce manufactured spending, it won’t work forever.  The credit card companies are closing the loopholes as fast as they can find them.  This means that you regularly have to keep up with what works and what doesn’t, and it takes time and energy.

I think a lot of people really enjoy gaming the system, and if you can make it fun, then good for you.  But for me, I don’t think I will ever use manufactured spending.  The reason?

You don’t need manufactured spending to make travel hacking work.

That’s right. Most minimum spending requirements on new cards are $5000 or less in 3 months, and many are $3000 or less.  The key to making this work is that you can only apply to one card at a time.  We usually have $3000 in spending we can put on credit cards in 3 months, but we rarely have $6000.

Before I started this experiment, I would have told you applying for just a single card at the time wouldn’t work because your credit score would get dinged with each new application.  However, as noted last time, these applications haven’t affected my credit as much as I thought they would.

Before the experiment, my FICO score was 796, during the update in May it was 770, and as of this writing it’s still 770.

So, in the future, I think I’ll stick with one new card at a time and then just apply for a another one after I meet the minimum spend on the first one.

Now on to the second question,

What am I going to do with the rewards?

This one’s easy.  I’m actually writing this article while sitting in a beach side cabana on Ambergris Caye in Belize!!!!

So I think I’ll wrap this post up, grab a Belikin beer, and head down to the water.  I’ll give you some details on the trip and the exact breakdown on how we used our miles and how much the trip cost in the next update.  Stay tuned.

Have you ever been to Belize? Do you have any thoughts about doing a single card at the time rather than a lot all at once?  Want to share any thoughts about manufactured spending?

Other posts in this series:

A Beginner’s Thoughts on Travel Hacking

The Travel Hacking Experiment: Part I

The Travel Hacking Experiment: Part II

The Travel Hacking Experiment: Part IV

The Hoard: July 2015
The Travel Hacking Experiment: Part IV

4 thoughts on “The Travel Hacking Experiment: Part III

    • middle class,

      I plan on giving the complete details on how I used the points after we get back from the trip. Basically, we used AA miles to get the plane tickets and also used AA miles and HHonors points to book 6 nights of our vacation. I’ll give you the exact breakdown some time in August when I write the next installment. Cheers!

  1. I am in full support of getting as many points as possible to fund a trip. We opened a 2 AMEX cards to get major Aeroplan Miles which we used to get a trip to Japan. It was a huge savings. Manufactured spending makes me a bit more nervous, maybe because I have never done it. I just prefer to only take a card where I know I can meet the spending requirement to get the points.

    • Jess,

      I agree. I am going to continue signing up for new cards but in the future I’m going to get them one at a time. Going in to the experiment I was thinking that manufacturing spending wouldn’t be much trouble, but after reading about it it seemed like a bigger and bigger hassle. That’s awesome about the Japan trip! I’d love to travel to Japan some day. Cheers!

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The Hoard: July 2015

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