A few weeks ago, I wrote about how to eliminate manufactured spending fees. I cited tools like the iBotta app, gift card promotions, shopping portals, and cash back credit cards. When cash back portals reduce payouts and I have no other options, I can always count on my cash back cards to help me off-set Visa gift card fees. In my post about eliminating Visa gift card fees, I mentioned the substantial rewards you can earn with a 2% cash back credit card. But the question is: Should you use these rewards for travel or apply them towards covering more gift card fees? I think that’s something everyone should consider and the answer will vary depending on your travel goals and redemption choices.
To recap, I used the example of purchasing $9,500 worth of mall gift cards. Why $9,500? Because you can buy up to $10,000 per day, including fees. I personally don’t like having odd-numbered gift cards, so I stick to $9,500. This $9,500 Visa gift card purchase would incur $75.05 in gift card fees and roughly $6.65 in money order fees. Meanwhile, you would earn $189.52 in cash back rewards. After fees, you’re left with a $107.82 profit. Do you pocket these funds or use them to fund another round of gift card purchases with a rewards credit card? That depends on which card you use and how you value your miles
Airline Credit Cards
For $107.82, you can cover the purchase and liquidation fees for $12,500 worth of Visa gift cards. That’s 12,500 – 18,750 worth of airline miles, depending on the airline credit card you use. Is that worth more than $107.82? Absolutely! In fact, most people value airline miles (i.e. American, United) at 1.4 cents each, minimum. That brings the value of these miles at $175 – $262.50. Save up your points for a first class or business class award and they’re worth even more. So yes, I would definitely use rewards from a 2% cash back towards off-setting Visa gift card fees rather than using the cash for direct travel purchases. The only exception is if you need funds for a mileage or mattress run. In that case, it might make more sense to put the cash towards covering those fees than buying more airline miles. YMMV. Literally!
Chase Ultimate Rewards Cards
For $107.82 you can earn a lot of valuable Ultimate Rewards points. For starters, you would earn 18,750 UR points with the Chase Freedom Unlimited. Transfer those points to your Chase Sapphire Reserve account and they’re worth $281.25 towards travel. Transfer those points to one of Chase’s many awesome travel partners and you can book free flights, up to 3 nights at a Category 1 Hyatt hotel or one night at a Category 4 Hyatt property.
Still have a Chase Ink Plus card? Then you can churn $3,300 worth of Visa gift cards purchased from Staples for a total of $101.25. Total points earned? 16,500. Not as great as the return on the Chase Freedom Unlimited, but still worth noting if you’re trying to max out the annual $50,000 office supply store bonus.
American Express Credit Cards
The reason I’m singling out the Amex Everyday Preferred Card is because of the 50% bonus points paid out when you make at least 30 purchases in a billing period. The Business Platinum Card also offers a 50% bonus on purchases over $5,000. So $12,500 worth of Visa gift card purchases on the Amex Everyday Preferred Card could amount to 18,750 Membership Rewards points. You would even come out ahead by redeeming these points for a gift card (valued at $187.50). Of course, I wouldn’t recommend this option. But you’ll definitely get more than $107.82 worth of value by investing that amount into churning Visa gift cards which will result in 18,750 Membership Rewards points.
Starwood Preferred Guest Credit Card
Putting $107.82 in cash back rewards towards Visa gift card purchases would earn you 12,500 points through the SPG Amex Credit Cards. That’s enough for up to 6 nights at a Category 1 SPG Hotel or one night at a Category 5 SPG hotel. Save up 20,000 points, transfer them to an airline partner and you’ll end up with 25,000 miles. Or transfer SPG points to Marriott and get 37,500 points you can put towards free nights or Air + Hotel awards. The point is, you’ve got lots of great options. No matter which one you choose, you can get way more than $107.82 in value out of 12,500 SPG points.
Club Carlson Premier Rewards Visa Signature
I get it: Club Carlson is on thin ice these days. But the Club Carlson Premier Rewards Visa Signature Card remains one of the best credit cards for earning free nights via credit card spending. The card pays out 5 points per $1 on non-bonus category spending. Spending $12,500 worth of gift card purchases on this card would earn you at least 60,000 Gold points. What are 60,000 Club Carlson points good for? You can redeem up to 6 free nights at a Category 1 Club Carlson hotel. More into high-end hotels? You can redeem 50,000 points for a Category 6 Club Carlson hotel or save up another 10,000 for a top-tier Category 7 award. The point is (no pun intended), that you’ll get way more than $107.82 worth of value by channeling your cash back rewards towards gift card fees to earn Club Carlson points.
Cash back credit cards are great for earning rewards. But I would absolutely consider putting the cash towards covering manufactured spending fees incurred via mile-earning credit cards. In many cases, the value of the points and miles earned exceeds the value of the cash you’re spending to earn those points. While it pay seem difficult to part with ~$100 earned via 2% cash back credit cards, investing that money in more gift card purchases with a travel rewards credit card (and thus off-setting the fees) is a better option.
But I want to hear from you: Do you incorporate cash back credit cards into your manufactured spending strategy? Do you keep the cash back or use it towards off-setting other gift card fees?
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