One of the questions I get asked the most about manufactured spending is how I manage to cash out so many money orders. While I’ve been churning pretty low numbers for the past few months, things have picked up recently and I’ve purchased around $40,000 worth of Visa gift cards in January alone. Most of them have been liquidated, but as of today I still have $14,000 or so left to unload. Next month, I plan on doing even bigger numbers, in time for one last AAdvantage blowout before the March 22 devaluation goes into effect. So how am I unloading $40,000 worth of gift cards in a post-Bluebird world without getting my bank account shut down? The key is diversification. If you’re looking to cash out money orders in large quantities like I am, there are four options:
Deposit Money Orders Into a Bank Account
A lot of people are losing their sh** over what I originally wrote, so I’ve edited this part. Here’s the gist (without the offending parts): You can make money orders out to yourself and deposit them into your bank account. Any deposit of $10,000 or more gets reported to the Financial Crimes Enforcement Network (FinCEN). If you intentionally keep deposits under $10,000 to avoid getting reported, you’re partaking in structuring, which is an illegal activity that could result in criminal prosecution. Class dismissed.
Make Credit Card Payments with a Money Order
Most of the time, I unload money orders by paying off credit cards directly at a bank branch. This pretty much limits me to Bank of America and Chase, but occasionally I’ll come across a Citi branch, which enables me to pay off a Citi AAdvantage card. In any case, paying off credit cards with money orders in-branch is very easy. You simply enter the bank’s name into the ‘To’ line (i.e. Chase, Citi, Bank of America) – you might want to confirm with the teller, but usually just the bank name will do. Then sign the line below and enter your address in the last row. Be sure to bring your credit card with you, since the teller needs it to apply the payment to the account. The transaction is quick and gets treated like any other cash payment you’d make at a branch.
I often use money orders to pay off my credit cards as well as accounts belonging to my dad and brother. Occasionally, I’ll have them fill it out and go to the branch themselves, since it might look suspicious if all the payments on their accounts come from me. Again, it’s about diversifying and making sure all the funds aren’t coming from one place.
Make Money Orders Out to Others
When I’ve exhausted option 1 and 2, I make out a few money orders to immediate family members. They deposit the money orders into their checking accounts and use the funds to make payments on the credit cards I use to purchase Visa gift cards. I do this sparingly – I just gave my brother $2,000 worth of money orders and will be unloading those funds as soon as they post. The reason I don’t like to get other people involved in the process is because I could lose track of how many money orders I’ve given out. It’s also not worth exposing other people to the possibility of account closures, so I do this in moderation.
Of course, you can always use money orders to make payments for actual purchases and services: Make a money order out to your landlord to cover the rent, daycare provider, or any other bill that can’t be covered with a credit card.
Cash Out Money Orders
I’ve never cashed out a money order directly, but it’s possible to do this at places that cash out checks. The fees are pretty high: Walmart charges $3 for cashing out money orders up to $1,000. Adding this to the gift card and money order purchase fees you’ve already incurred drives up the cost of gift card churning by almost 30%. You might find a place that offers much lower fees for cashing out money orders, but it won’t beat the $0 cost of the other methods outlined above, so I’d only choose this route as a last resort.
At this point, I’m sticking to unloading money orders through bank deposits, credit card payments, and by occasionally making money orders out to others.
Which of these methods do you use to unload money orders?
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