Buying Groups: A Smart Strategy for Manufactured Spending

If you have been researching travel hacks and quick ways to build up rewards points, then you may have come across the term Manufactured Spending. Depending on who you ask, this is a fantastically effective way to build up your rewards, or else a risky approach is best avoided. In the article below we will talk you through exactly what manufactured spending credit card buying groups are and how they work.

What is Manufactured Spending?

So, what is manufactured spending and why do people do it? Well, manufactured spending credit card methods involve making purchases purely to collect points and/or hit your card spending requirements. You can artificially speed up your rewards points accumulation through the process of buying batches of services, products, tools, and gift cards at a low cost.

People identify products that can then be converted back into cash at a lower cost than the benefits the points they accumulate afford. For example, if you earn 5% cash back for a purchase and can sell that item again with costs of 1%, you will have earned 4% while making that purchase.

What is a Buying Group?

A buying group is a group of smaller businesses that have come together to make large purchases as a unit to access lower prices, and more benefits from retailers.

Also known as group purchasing collectives or GPOs (group purchasing organizations), these are an effective way to access slower prices on business essentials such as computers, stationery, tools, and hardware. They can also be an effective way to build your credit card spending if you make the bulk purchase with your card and are then reimbursed by other members of the collective for the products they have ordered.

There are a range of different buying groups in the US, some of which concentrate on specific product niches, and some which are more general. Business buyer groups can be focused on:

· Office Supplies

· Facilities management contracts.

· HR or Payroll services.

· Insurance Costs.

· Shipping Services.

· Computers and Technology

· Hardware and Tools.

Are Manufactured Spending Credit Card Techniques Illegal?

Manufactured Spending is legal, however, there are some risks involved with the practice. Buying groups and MS techniques are similar to those employed by money launderers. And this increases the risks of you triggering extra checks from banks and credit unions if they notice something unusual in your buying behavior.

Credit card firms, such as Amex, and retailers may also have processes put in place to limit the practice while using their products. The police and IRS may even take an interest if your financial transactions are markedly suspicious.

You should also be aware that you are required to report this to the US treasury if your cash transactions exceed $10,000. All of this needs to be weighed up against the potential benefits of manufactured spending when deciding if this is a method you want to use.

Tips for Getting Started with Manufactured Spending and Buying Groups

If you decide that you want to use manufactured spending to increase your credit card spending and points, then there are some tips you need to keep in mind.

Take Things Slowly

It is easy to get carried away, but you should take things slowly and start small. You need to take the time to familiarize yourself with the method, find what techniques you are comfortable with, and how MS can fit within your overall spending and budgeting. It can be tempting to get over-excited and spend lots at the start to build up your points as quickly as possible, but you should view this as a long-term travel hack.

Do Your Research and Avoid Certain Cards

Certain major credit cards such as American Express should not be used for buying group or MS purchases. Card providers are very much aware of manufactured spending and how it affects their profits (more points mean more expensive rewards redeemed!) They will clamp down on this spending behavior if it is spotted.

Keep Up To Date With MS Methods

The world of buying groups and MS moves quickly, and certain techniques (such as gift cards) can become ineffective. If something becomes risky or difficult to do, then it is best to cut your losses and move on to a different method.

Make Sure Group Buying and Manufactured Spending Doesn’t Negatively Affect Your Finances

Bulk buying on your credit card will often involve temporarily taking on debts of thousands of dollars on your credit cards. You should take the time to make sure that you are comfortable with this and financially capable of this spending without negatively affecting your financial status. The aim of both of these techniques is to save you money overall, so make sure not to overexpose yourself or place yourself in risky situations where you may not get your money back.

What Are the Risks Involved?

Although you can earn a substantial amount of valuable credit card points using buying groups and MS methods, there are some factors to consider before you get started:

· This can be time-consuming and in the case of buying groups involve a substantial amount of administrative tasks if you are responsible for a bulk purchase.

· Some credit cards will penalize you or potentially close your account if they identify these techniques.

· You could be exposing yourself to a loss if you are unable to get cash back for your bulk purchases.

You need to make sure to do your research properly and only proceed when you feel extremely confident that the points profits of an opportunity outweigh the financial risks.

Takeaway: Buying Groups: A Smart Strategy for Manufactured Spending

Manufactured spending and buying groups can help you to earn valuable points which you can use to score discounts on your travel and hotel costs. However, whether it is a good fit for you will depend on your reward points aims and how much time and money you a prepared to devote to the endeavor.

If you do decide that this is a travel hack you would like to try, make sure to do your research, familiarize yourself with the risks, and start slowly.