There’s a term in travel hacking called “Manufactured Spending” or MS. I do not suggest that you get involved in manufactured spending for the most part as this is a very, very advanced subject. If you do it wrong, you could wind up with your credit cards being shut down. Furthermore, what works today might not work tomorrow. The credit card industry, among other industries are in a constant state of whack a mole with travel hackers on this subject. However, there are a handful of ways to generate some basic manufactured spending that is pretty safe.
Please keep in mind that this strategy is not going to be worth it for most people but I know there are some people that are on a budget. As a result, it might be worth your time to try this strategy. Years ago it was much better but like just about everything else, the banking industry caught up and made this unattractive for most.
Before we begin
Call your credit card company and ask that your cash advance limit be set to zero. Under no circumstances do you want to use your cash advance on your credit card either purposely or accidentally. There are a number of things that can accidentally trigger a cash advance and this strategy is one of them. Even if you know for a fact that this strategy will not, you still want to take a few minutes to do this so you don’t have to worry about it in the future.
Opening bank accounts with your credit card
It might sound crazy but yes, you can fund a new bank account with a credit card. Unfortunately, a lot of banks have shut this down because it was abused by travel hackers. Bank of America for example will not allow this. I hate to provide a list of banks that will accept credit cards as this is subject to change at any moment. In addition, these banks might not have a branch near you. Regardless, here are some banks that allow funding of new accounts with credit cards at the time I wrote this:
Chase – $500
SouthState Bank – $250
TD Bank – $1000
GTE Financial – $500
Wells Fargo – $50
US Bank – $500 (this seems to fluctuate)
1st Financial FCU – $500
Bank of Colorado – $1000
BB&T – $300
BBVA Compass – $500
Citizens – $1,000
KeyBank – $100
M&T Bank – $250
Sun Trust – $250
Truist – $500
So in other words, this doesn’t work for every bank and what works today might not work tomorrow. Very annoying. On top of that, one bank may code one card as a cash advance and yet, a different card will not code as a cash advance. For the next bank, it could be the total opposite. That’s one of the many reasons why you need to set your cash advance limit at zero. If the card doesn’t go through, than it was going to code it as a cash advance.
The Process
Let’s put this all together to see how it would actually work
1 Apply for a new card with a sign up bonus. I strongly suggest you only do this with a card that has an introductory zero percent APR (you’ll see why in a second)
2 When you get the card, call right away and ask for your cash advance to be set to zero. This way you don’t have to worry about any issues with an accidental cash advance
3 Find a local bank (or banks) that will allow you to fund a new account with a credit card
4 Read the terms and conditions carefully! If you’re not applying for an account that owns some type of bonus, you should be able to withdraw your money fairly quickly. However, there may be some situations where you have to leave the money in for a certain amount of time. Or it could have a minimum balance to avoid fees such as $100. That’s why you want the zero percent APR card. You’ll still have to pay the minimum payment but you won’t have to pay off the balance each month to avoid interest. Regardless, I still suggest taking your money out and paying off the card as quickly as possible to avoid any issues
5 The odd thing about bank accounts is that you usually can’t close them right away without penalty. This is why it helps to read the terms and conditions before you apply (or while you’re in the middle of the process). Banks love fees so you want to make sure you know when you can take all of your money back out and when you can close the account. Since some banks charge fees for dormant accounts, I suggest closing the account as soon as you can. There’s just nothing to be gained by keeping a dormant account open.
6 With your money withdrawn you can then pay off your card. You’ll get your sign up bonus and you won’t have to spend the full amount of money to get it.
So why doesn’t everyone do this?
If you didn’t pick up on it yet, this entire process is incredibly annoying and even if you’re successful, you’re probably looking at an hour or two per account. For most people, it’s just not worth it. But if you’re on a budget, you can still get into travel hacking; you just have to do more work. But that’s what I love about travel hacking. It allows people to go on amazing vacations that they would not otherwise be able to afford.
Unless you have a ton of free time on your hands, you’re probably not going to be able to meet your full sign up bonus using this method but this could easily reduce the spending you’ll need for $1000 to $1500. That could make higher sign up bonuses easier to meet for those without a lot of spending.
Please note that I do not suggest you tell the people at the bank that you are doing this. While not illegal, it’s just not good to get on their radar. With travel hacking, the less said the better. Also, I do not suggest doing this just to get a few points. It’s just not worth it for $10 to $20 worth of points.