A well-known trick used by government entities and large businesses is to borrow money in the form of bond issuance. Make interest payments every time they are due (usually every 6 months) and then just before the bond becomes due, issue a new bond and use those proceeds to pay off the first bond.
What if we applied this strategy to Manufactured Spend? AMEX Simply Cash offers 5% back at Office Supply Stores as does Chase Ink. There’s an interest-free grace period before payment is due. What if we created a perpetual motion machine whereby we MS on Card 1, and just before the bill becomes due, we MS on Card 2 for the same amount to pay back Card 1. Then when the bill on Card 2 becomes due, we MS on Card 1 again.
One might need 3 cards to pull this off perpetually depending on how you can rig the statement closing dates. Also, due to maximum spend at Office Supply Stores capped at $25k or $50k per year, you are limited to a total perpetual spend of that amount. Also, if the credit card company ended that specific card, you’d effectively have to end this game and be able to pay back both cards so keeping the amount owed in a high yield savings account is crucial.
Is this a strategy employed by any MSers? If so, what are the specifics to make it work? If it won’t work, what are the flaws in the plan?
Why not just do an AppORama?
The whole point of MS is to churn. You’re idea is just to get a zero interest loan and a few reward points. I think the ROI would be better on an 0% offers from credit cards for 12-18 months.
In my strategy above, you’re still churning, but you’re doing it in such a way to maximize rolling over the debt each month across different cards. I always got the impression in regular churning you buy a gift card, convert to money order, and pay off the credit card. In my proposed strategy, you use the money order to pay off a different credit card and then rotate which card you’re churning with to always get 5 to 6 weeks worth of interest-free loans.
But the idea behind MS is that you buy your gift card (the max allowed by your credit limit) and convert it to cash to pay off your credit card bill, and then buy another gift card as many times as you can in one month to maximize the rewards.
My Chase Ink card only offers $25k back in 5% office supply spend and I have a $20k credit limit on the card.
My AMEX Simply Cash card offers $50k back in 5% office supply and I have a $25k credit limit on it.
Is the assumption that most people who MS must have very low credit lines, otherwise you could cap out your annual rewards in two to three cycles of buying GCs and paying off the card?
In my perpetual motion strategy, the $25k Chase Ink card would be used across a 6 month period since I’m alternating months, for about $4k for each of the 6 months used, in GC spend. With a $20k credit line, I don’t need to pay off the bill mid month.
Float mattered a lot more when banks paid 5% and not 1%. That said, a possible big win of perpetually rolling CC float is not the paltry 1% interest you might earn on the funds in a bank account (or higher opportunity cost if you invest it), but the chance that you might never have to pay it back. Sure it’s not likely, but your death or bankruptcy (or serious disability under some protection plans) can often wipe out your CC debts in practice even if they might be entitled to collect against your non-zero remaining assets.
No, that’s not the assumption. So for your case, you could maximize your card lineup by spending 20k in a day on Ink. Then do 25k/day on Simplycash, and use the 20k capital from the Ink to help cycle your amex card faster. You’d hit your limit on both cards in 3-4 days.
If someone has a limit of 4k and 4k. They do the same thing. It would just take 10-12 days to hit your limit on both cards rather than 2-3.
OP’s idea looks good on paper but with AXP Rats going full force in ‘surveilling’ accounts, I don’t expect such strategy to succeed especially in sites like this where information is open to the public. Recently, AXP has revised terms in a lot of accounts where bonuses can take up to 120 days to post which gives the rats a lot of time to manually review accounts. Purchases made at OSS like Staples and ODOM are easy to spot since they submit L3 data. For regular churning to get the bonus, this isn’t good with average time given to earn bonuses set at 90 to 100 days. By the time we find out if our purchases qualify, they can tell us that our “purchases don’t qualify” based on their T&C.
I can’t tell for now but with ideas like yours that the rats can review and find means and ways to plug it, it’s only a matter of time when new revisions to their terms will come out to CTA (cover their a$$) to avoid CFPB complaints filed against them while they take their sweet time to review flagged accounts.
IMO, MS activities on ANY AXP card should be well planned and kept away from the rats. This is the reason why many have gone underground to discuss their strategies in private or apps like slack. People get invited to these groups, where it is common to have terms where the new recruit is bound by an oath (think omerta) to preserve their secret strategies they’re able to prolong.
I’m unable to see the difference between my proposed strategy and standard MS with respect to shutdown by credit card companies. In standard MS, you use CC to buy GC, convert to MO, deposit MO into bank, use bank to pay down the CC.
My proposal is identical except instead of paying down the CC you used to buy the original GC, you pay down last month’s CC. You still have the same amount of money being used on each card, and still paying down each card on time, you are just stretching out the grace period on each card to maximize float.
you may not view it the way the rats view it and if they’re hired to find out all strategies that MSers do and plug the loopholes, it will mean less money going out of their company. I’m zero-ing in on AXP cards for now based on a lot of DPs on FT, reddit and other bloggers who are giving a heads up on revision of terms that AXP has been putting on a lot of their cards.
you mentioned standard MS with respect to getting shutdown and there are shutdown reports on FT about these known methods. HOWEVER, there are still plenty of strategies kept away from public boards so the FIs may take a while before they find them out and plug the loopholes.
It doesn’t matter what the specific method of MS is with respect to perpetual debt rolling. The general concept of MS is always the same:
Use your credit card to purchase X
Convert X into money
Use money to pay CC debt from step 1
Whether you are purchasing gift cards to use on Money Orders, or purchasing gift cards to use on Tio, or purchasing SNES consoles to resell on eBay, the general concept applies.
Perpetual debt rolling has nothing to do with the MS method and everything to do with maximizing grace periods and rolling forward the debt to the next credit card. You do whatever it is you do to convert Credit Card spend into Money, and then stash that money in a high yield savings account. Then do whatever MS method you want to convert CC spend into Money on Card 2, and use that money to pay off Card 1. Then keep rolling forward to Card 3, and eventually loop back to Card 1.
I’m still very confused by how rolling debt forward would instigate the AXP RAT team or be any different than paying off your debt in full on the card you used to do the MS transaction.
You can’t pay off 1 card with another without doing a BT, thats where the goverment comes out ahead. You still need an account with the amount due at the end of every month.
Why not MS on both card 1 and card 2 at the same time. I don’t see the benefit that splitting the transaction up does. You get your grace period every month as long as the statement balance is paid off.
We need some APY to make sense of this so I’ll use 6% for simplifying the math [You can substitue any number you want]. Also lets assume 10k limit on each of the cards Chase Ink [Ink]+AmexSimplyCash [ASC] (it doesn’t really matter)
Month 1: 10k on Ink [$50 in Interest saved (10000*0.06/12)]
Month 2: 10k on ASC [$50]
Month 3: 10k on Ink [$50]
Month 4: 10k on ASC [$50]
Month 5: 10k on Ink [$50]
Month 6: 10k on ASC [$50]
If instead you maxed out both cards each month
Month 1: 10k on Ink [$50 in Interest saved (10000*0.06/12)]
Month 1: 10k on ASC [$50]
Month 2: 10k on Ink [$50]
Month 2: 10k on ASC [$50]
Month 3: 10k on Ink [$50]
Month 3: 10k on ASC [$50]
I think I see what you’re trying to do. You’re trying to leveraging the grace period to use as continuous free float. But the benefit of dragging this process out versus doing it all at once depends on the investment type. Typical stocks and bonds won’t care, but if you have a personal business where a smaller consistent balance (10k each month for 6 months) can earn you a better rate than a large variable balance of (20k each month for 3 months), then breaking up your transactions on multiple cards does make some sense.
The main thing I got out of this thread was that prepaying your card before your statement ends actually does rob you of some grace period Interest. If you have some type of capped cashback like those two cards you shouldn’t prepay the cards to restore your purchasing power if you feel the deal will still be available later.
It was easier to do this strategy when Bluebird and Serve were readily available. Many people managed multiple Serve and Bluebird accounts and took advantage of the float. If you have a sympathetic Wal Mart Money Center you can do bill pay on debit cards for a fee.
As far as secret sites go, everyone can choose to contribute how they wish, but I would highly discourage people from telling others not to share their strategies. The way they get refined is often through discussion, and unless you want to invite TripleB to the secret club, talking about it here is the way to go.
Statement End Date - The date where your monthly bill is calculated.
Statement Start Date - The date when a new monthly bill calculation begins.
Statement Due Date - The date when your bill is due.
Grace Period - Days between purchasing an item and the due date for that bill (typically at minimum DueDate-EndDate).
MS to your credit limit on [Card A] at the Statement Start Date.
Invest money in H&B earning x%
At the Statement End Date [Odd], MS to your credit limit on [Card B]
Before the Statement Due Date of [Card A] pay off it’s balance with the newly MS’d money.
At the Statement End Date [Even], MS to your credit limit on [Card A]
Before the Statement Due Date of [Card B] pay off it’s balance with the newly MS’d money.
Easy enough, you earn x% annually in whatever your investing in, up to the lower credit limit of the two cards.
All of this without needing to send money back and forth as long as you can maintain the MS
x% * min(credit_limit_a , credit_limit_b) APY
Of course the real difficult factor is finding such a flexible MS oppurtunity that won’t be killed. If the MS opportunity you were using dries up, this will force you to do an untimely exit.