Category: Wisdom

Financial goons will be quick to tell you about the time value of money, which is a basic concept in economic theory that says money is worth more now than it is in the future, in part because:

  • You can earn interest immediately on money you have now
  • Thanks to modern monetary policy, inflation will always eat away at money’s value
  • Opportunity cost (which is sometimes added directly into either or both of the above)

The same concept applies to points and miles, but the factors aren’t quite the same. In the case of points and miles, they’re worth more now than the future because:

  • Devaluations happen
  • The redemption value of points is often tied to the cost of tickets (inflation bites here too)
  • Currencies get washed away
  • Miles and points don’t earn interest

What’s the takeaway? Burn those points as soon as practicable. Can you come up with a formula to describe this, asked no one? Yes we can, but no, I’m not going to do that today.

Have a nice weekend friends!

Yes, it’s time for the quarterly MEAB math nerd joke. Sorry, not sorry.

Editor’s note: My mail software was daylight savings naive and thus didn’t update yesterday’s delivery time with the time zone change, probably because it was developed by zonies according to reader Jim. You can access yesterday’s post here.

Chains popular with manufactured spenders often have limits on how many times a card can be used in a given time frame, for example, famously Kroger will usually decline a credit card after six swipes in a rolling 24 hours, chain-wide. That obviously means you’re limited in total manufactured spend at Kroger for a specific card, unless of course you aren’t:

  • Apple Pay looks like a different credit card
  • Many bank issuer’s authorized user cards have a different account number

A little creativity can go a long way.

Of course there is such a thing as being too creative.

The Main Question

A common manufactured spend and churning question is, “how am I going to spend $15,000 in the next three months to meet my sign-up bonus?” This question is especially prevalent when you’re getting started, and focuses primarily on what methods you can use to meet your target.

At some point, your capacity for manufactured spend may grow substantially with experience. When that happens the question often becomes, “what cards do I have that support $100,000 in spend today, and how can I pay them off tomorrow without fraud locks, ACH kiting, or SAR reports?” When you’re asking this question, you’re no longer focusing on methods to meet spend, but instead on how you can increase throughput and move money and credit lines to meet the demand.

When You’re Operating with Big Numbers

The relevant follow-up questions for someone operating in the latter regime become:

  • How do I cycle money through my accounts without kiting?
  • Which card issuers are going to be upset by this kind of spend?
  • What’s the best return I can get on a workhorse card?

The last question is interesting because it shows a big shift in how churning works. Realistically you can’t hope to get enough new cards with sign-up bonuses in a month to support even a few days of six-figure spend. So, the percentage of your profit from sign-up bonuses becomes small, and to an extent unimportant because the proportion of them that you can earn relative to your spend is negligible.

What’s Your Point, Poindexter?

When offers like 99 bonuses of 15,000 Membership Rewards for $4,000 spend come around, several readers typically ask me why anyone cares. The question usually means that the reader hasn’t developed a huge manufactured spend volume, and that’s ok; not everyone wants or needs to hit that volume to be successful. If they do however attain big volume, then the reason becomes instantly clear: it’s a way to increase your return on large spend that’s repeatable 99 times, or maybe even 99*n times.

Have a nice Tuesday friends!

The MEAB Tuesday morning coffee mug.

Let’s talk possibilities:

[Q]: Is it possible to manufacture $100 spend per day?
[A]: Yes

[Q]: $1,000?
[A]: Yes

[Q]: $10,000?
[A]: Yes

[Q]: $100,000?
[A]: Yes

Does this continue forever? No, but the ceiling is high. Always be probing.

Is it possible that this is OJ?

Introduction

I’ve been slowly collecting images of compromised gift cards found at stores for over a year for a future gift card scam spotting post, and while those attacks vary, they’re all basically some form of tampering with a physical gift card, its package, or its barcode. You’ll find them in the wild as compromised Visas, Mastercards, Apple cards, BestBuy cards, or just about anything else. (Side note: If you have example pictures of that type of scam and wouldn’t mind if I include them in the post whenever I write it, I’d appreciate an email. I promise I’ll write it before the heat death of the universe or you’ll get double your money back.)

The New Scam

Over the weekend there was a new type of gift card scam (albeit an old type of network security scam) to hit the community: a hacked email inbox. This matters for two reasons:

  • Many gift card buyers and resellers keep all their card numbers in a shared Google Sheet, accessible with your Google account
  • Physical Happy gift cards are redeemed online and a link for later retrieval is sent to your email

If a hacker gets control of your email, they’ve probably got access to your gift cards too.

Staying Safe

Not to sound like a network security prognosticon (yes, I made that term up), but there are steps you can take to help protect yourself from a similar attack:

  • Always use two-factor authentication on your network accounts
  • Get rid of any dormant accounts that may have access to sensitive information
  • Double check your sharing settings on sheets or documents with sensitive information
  • Prefer Google Authenticator instead of SMS messages for two-factor authentication
  • Archive and remove old information from your documents and sheets

Finally, if you find yourself in a similar situation, do a few things immediately:

  • Change your passwords
  • Call the card issuers and report fraud (the good news is you still probably have all the card numbers too)
  • Reach out to others in the community who can offer level headed advice after the dust settles

If this happened to you, or happens to you in the future, I’m sorry, that sucks. If it hasn’t happened to you yet, consider making the above steps part of your regular housekeeping.

Good luck!

Prognostico: The network security prognosticon.

When you talk to a bank to change something, ask for something, appeal something, or to close something, you’ll often be asked some form of “Why are you doing this?” Usually customer service is asking for two reasons: first, because they’ve got metrics and they need to keep track of reasons that people call, and second, they’ve got practiced responses and rebuttals for common objections.

There’s a simple answer to “Why?” that almost always ends the conversation without any further discussion and you should add to your repertoire: “Budgeting”

For example:

[Q] Why do you have so many AmEx cards?
[A] Budgeting

[CS] This card offers thousands of dollars in savings for a small annual fee, why would you want to close it?
[Churner] Budgeting

[Q] Why do you have 27 checking accounts at our bank?
[A] Budgeting

[Q] Why are you downgrading this card two weeks after you upgraded it?
[A]: Budgeting

[Q]: I see a bunch of back-to-back charges for $49x.xx. Why didn’t you just run a single big charge?
[A]: Budgeting

[Q]: Why did you receive nearly a hundred envelopes from American Express with your name and Roman numerals?
[A]: Budgeting

[Q]: How come your American Express Business Platinum card is stored on your daughter’s Delta SkyMiles profile?
[A]: Budgeting

[Q]: Why did you open a teen spending debit card when you don’t have kids?
[A]: Budgeting

[Q]: Why does MEAB exist?
[A]: Budgeting

Good luck, and happy Tuesday!

For bonus points, send template dashboards showing your “budget” to customer service.

In scientific circles we occasionally discuss the “epistemic gap”, which refers to things that are knowable in principle but for whatever reason we still don’t know them.

In manufactured spend there’s a favorite epistemic gap of mine: How much spend can you possibly generate in a day? You can of course ask related questions too, such as:

  • How much spend in a day if you spend only from home?
  • How much spend in a day with a grocery category multiplier?
  • How much spend in a day with a single card issuer?

I could tell you what my records for the above are, but assure you that my records aren’t world records. I can confidently say that the world records for each of the above are beyond an average American annual household’s income though.

What’s the point? If you’re not shutdown, you haven’t filled the epistemic gap, so consider whether bigger scaling makes sense or whether you’re exactly at the level you’re comfortable with.

The epistemic gap, illustrated for visual learners.

We’re in an extended period of Chase shutdowns that started a week ago, and while we don’t know the complete causes, related factors might be:

  • Heavy use at a manufactured spender fitness club
  • Earning a sign-up bonus at a manufactured spender fitness club or popular rebate site, even with light spending
  • Using Chase Ink card links that bypassed backend business approval logic

If you’re caught up in shutdowns, there are options to squeeze Chase back, not all is lost:

  • Call or write the Chase Executive office and open a case
    This is only likely to be fruitful if you’re shutdown for rewards abuse and don’t have heavy manufactured spend, or if you’re shutdown due to bust-out risk. For body builders, I don’t expect a ton of success here
  • Exercise the arbitration clause in your account agreements
    I’m not an attorney and I’m definitely not your attorney, so don’t take this as legal advice. I imagine that having a manufactured spend friendly attorney on your side couldn’t hurt though
  • Wait seven to ten years and you may find yourself back in
    Yes it’s a long time, but it’s not forever
  • Find new players
    Isolate addresses to avoid any contagion spread through
  • Try and open a Chase Private Client account in branch
    Wait six months to do it, and you’ll need $100,000 or more in assets typically
  • Pivot to other banks for cash, United, and Hyatt
    Bilt is an option. You weren’t using Ultimate Rewards for much else, I assume?

Fortunately there are thousands of banks and credit unions out there that offer credit cards that still want your business. Always be probing!

Squeezing Chase if Chase were a GM car.