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Is Manufactured Spending Bad for Your Credit?

I’m coming off the heels of a pretty productive couple of months in terms of manufactured spending, followed by a vacation (sort of). I really cranked up the numbers at the end of last year. I’ve since slowed down and will likely keep my numbers to $25,000 per month or less going forward. It’s just all I can handle consistently without losing my mind. While I’ve shared my tips for keeping track of manufactured spending and mistakes to avoid while gift card churning, I’ve never address how large amounts of manufactured spending may affect your credit. Having had a few set-backs recently, I think it’s important to share the dangers involved in manufactured spending and how to ensure you don’t end up destroying your credit in the process.

Overdue household bills with scissors and cut up credit cards indicating resolve to economize.

As many of you know, my Barclay credit card accounts got shut down in December. I checked into the Conrad Dubai with my Barclay Arrival Plus MasterCard. By check-out, I learned that all of my Barclay credit cards were closed…along with those belonging to my family members. I had been churning gift cards very heavily on the Arrival cards. It was probably caused by a combination of cycling my credit line too many times and using Walmart Bill Pay. In any case, I’m lucky that it wasn’t a major bank like Chase or Amex that shut us all down. That would have lead to a bigger credit hit because we would have lost some of our oldest and biggest credit lines.

When you’re using credit cards for manufactured spending, be sure to take into consideration how a shut-down might impact your credit. The last thing you want is to lose one or more of your oldest credit lines and end up with substantial credit damage. Don’t get too carried away and be aware of how your credit may be impacted by a shut-down.

Another thing to be aware of with manufactured spending is keeping your credit card utilization rate low. Generally, it’s best to keep it under 30%. That being said, I personally make an effort to pay off my credit cards entirely before the statement closing date. Not doing this would increase my utilization rate, which can set off a red flag to lenders. If you’re using credit cards for high-volume manufactured spending, you run the risk of negatively impacting your credit if your balance is too high after the statement closing date. It’s tough to liquidate gift cards in a timely manner if you’re churning in high volumes. However, you really should time it so that your balances are paid off before the statement closing date. That way, your credit card utilization rate remains low. 

Keep your credit utilization rate low by paying off your credit cards before the statement closing date, be aware of activities that could lead to a credit card shut-down, and try your best to avoid it. Good credit is worth more than a 2-week vacation or a few thousand dollars cash back. The last thing you want is to ruin it for something short-term and end up on the hook financially when you try to purchase a home or finance a car. Use your credit cards responsibly while gift card churning and you won’t have any problems (that you can’t handle).

Has your credit ever been negatively impacted by manufactured spending? Please share in the comment section.

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Ariana Arghandewal

15 Comments

  1. Random question, do you sell stock photos? Curious because it doesn’t strike me as your style to buy stock images, or violate copyright, but a lot of your photos- like this cut up card scene- look professionally staged for blog use, and like they’d probably be good, commercially viable stock images. Just curious 🙂

    • Lol! I signed up for a free trial of Adobe stock and got a bunch of stock photos (like this one). At one point I got my images from Dollar Photo Club, which was bought by Adobe last year.

  2. To my knowledge, my credit hasn’t been negatively impacted by manufactured spending. Now that I have an Ink and an Amex Platinum with a $15,000 spend requirement, I plan to ramp it up in the future.

    Where can I easily liquidate Visa gift cards in California? I’ve tried Walmart in San Jose, and the cashiers often don’t let me buy money orders. Maybe I will try for money orders at the post office next, and make sure I’m not using Metabank gift cards (seeing that the post office payment system doesn’t accept Metabank gift cards).

    • San Jose is the worst place for manufactured spending. Can you trek up to Richmond? I’ve been hearing of issues at the post office, but its worth a try. Also, try Kmart and Quick Stop gas stations.

      • Thanks for the tips. I’ll definitely try going to Richmond, as well as Kmart and Quick Stop gas stations. I would be happy with any opportunity, but if Kmart and Quick Stop accept Vanilla gift cards for money orders, it would be even more amazing.

  3. Yes! US Bank shut down my oldest credit card that I opened close to a decade ago at a small bank in my hometown. How might you ask?

    Well most small banks/credit unions contract out their cards to companies like Elan/Synchrony/etc. Elan is a wholly-owned subsidiary of US Bank. In their eyes it was their card, not my bank’s!

    Still fighting them. My last complaint was 38 pages long 🙂

  4. Isn’t prepaying your balance before your statement closes also suspicious to your cc bank?

    • From what I know, the only form of “pre paying” that’s suspicious is if you have a $0 balance and you make a large payment (i.e. $2k) in anticipation of a large purchase. But paying your card off before the statement closing date is a good thing – both for the bank and your credit.

  5. Great article. Also, I could use some advice on how to start MS. My wife and I got the Chase Sapphire Reserve cards. She got the FU and I got the Perferred. We have got all the bonuses for these cards. But I’d like to start MS. Where can I find a detailed article on how to MS GCs?

  6. Ariana, isn’t it beneficial to pay it down to just a small balance (<10% of available credit)? This way it shows you had very low usage but at least there was some usage vs. showing $0 by the time it posts to your credit? Responsible usage is better than none, no?

    • You’re right, it’s good to keep a small balance. With MS, that can be a slippery slope if you’re doing large numbers. As long as you’re remembering to pay it all off on time (and pay the majority before the statement closing date), you should be ok.

  7. Thanks as always Ariana for sharing. I have had an 800+ Fico for the whole time I have been doing MS. Seems like I have been lucky with my local WM who let me liquidate around 8k every time I go there. They tell me there are about 4 or 5 people a day doing the same thing I am doing for points.

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