Manufactured Spending 101 — Tips And Tricks For Singapore
I’ve seen many websites, forum posts, and Reddit threads dedicated to Manufactured Spending (MS). However, most of them focus on the US market (I’m guessing because of a combination of high fragmentation due to the multiple states, yet combined with a high credit card penetration rate), and hardly any focus on my local market, the Singapore market, even though Singapore also has a very high credit card penetration rate.
You could say it is because Singapore is very small so the banks are very quick to close loopholes once they appear — but, there are still pockets of opportunity out there, if one does enough research into it.
Because of this, many people only discuss MS in non-public forums, or in very cryptic ways, to prevent their loophole from closing. I will write this article in a similar fashion — while I will not give any direct tips, I will talk about the principles behind MS and use some of the case studies and closed loopholes to illustrate the points. That should be enough for you to investigate, and hopefully, we can all connect at some point to discuss these things.
I’ll be talking about these topics:
- The theory and principles behind MS
- Miles vs. Cashback
- Case studies and closed loopholes
- Tips, tricks, and referral codes for free money!
All ready to dive in? Let’s begin!
1. The theory and principles behind MS
What is MS, and why MS in the first place? Is it legal? Will you get banned? Why would banks and credit card companies want to close the loopholes?
Those are some of the common questions and concerns that people have when they start researching this topic. Well, let’s start right at the top to define it.
Manufactured Spending is using your credit card to buy something to collect as many rewards as you can, but without actually paying for it out-of-pocket, or only paying a fraction of the amount charged.
How is this possible? Well, a simple example that US folks like to do is to buy gift cards, and convert the gift cards back to cash. This allows them to rack up rewards (miles or cashback) from the credit card, but not actually paying for it in full. Typically, there will be some fees involved when they convert the gift cards to cash, so the rewards earned would have to be significantly greater than the cost for them to do it.
So, conceptually, the easiest way to MS would be to buy cash-equivalents that you can convert back to cash (think gift cards, vouchers, and in the local context, topping up E-Wallets — more on this later). The problem usually lies when you want to convert it back to cash — there are usually fees or prohibitions in your way. Additionally, especially in Singapore, banks are cognizant of these tricks and have excluded many of them from earning any rewards (miles or cashback).
Why do MS then? Well, some folks (like me) do it for the thrill of the hunt — it is difficult to find these loopholes to arbitrage, and no one would say no to some free money. Others do it because they need to meet certain minimum spending requirements for bonus rewards (think — monthly minimum sum spending or sign-up bonuses), and some do it because they want to accumulate enough miles to fly first class suites constantly (something like this guy, but that was before COVID). So, the reasons vary, but I would assume that the draw of free money or free miles is a clarion call for people to start.
The next big question people will ask is whether it is legal. Well, I am not a lawyer (and you shouldn’t be relying on a random internet article for legal advice anyway), but conceptually, this is not illegal. There is a reason why the banks just exclude certain spending from the T&Cs — in the end, you are bound by the contract between you and the credit card issuer, so as long as the T&Cs do not exclude it, you should be fine. Of course, some types of spending are clearly illegal (e.g. using your card to access gambling websites), but typically those are the laws that are enforced outside of the contract and you shouldn’t be doing those sorts of things anyway.
“What about money laundering?” You may ask. Well, there is no money laundering here. All the money you have access to is clean, since it comes from your own savings and from your credit limit (if your money is dirty to begin with, that is your problem). One issue that some MS-ers face is that if they transact in too high volume or too frequently, the pattern of transactions will seem suspicious, and may look like someone trying to launder money. However, as with all things, just because a transaction seems suspicious doesn’t mean that it is. Banks process a multitude of transactions every day, and many of them are bound to be suspicious. That’s why most countries (Singapore included) have a “Suspicious Transaction Reporting” regime that requires everyone (not just banks) to report suspicious transactions. You don’t have to be 100% certain that money laundering is occurring to report these things — as long as it is suspicious, you have to report it. Thus, it is likely that if you do MS in massive volume or frequency, it will raise red flags and banks will take action.
That leads to the last point — can you get banned? Absolutely. Banks can ban and blacklist you if they feel that the risk of you using their services is too high (because of all these suspicious transactions you are doing). In fact, in most banks’ T&Cs, they reserve the right to close your account for any reason at all (a local quote would be that “they don’t like your face”). Heck, I’ve heard of some banks banning people because they “churn” their cards too much, e.g. by signing up, getting the juicy signing-up bonuses (think: free luggage bags and the like), then cancelling the card without further spending. If the banks notice that you keep doing such things, they may blacklist you and you wouldn’t know it, other than your credit card application getting rejected.
But, generally speaking, as long as you keep it reasonable and don’t go overboard, you should be fine. Just don’t do (stupid) things like charge $100k to your card every month when your salary is $100k (or less!) a year — that kind of thing would raise alarm bells everywhere.
Lastly, why is it so taboo to talk about this publicly? Well, because of the willingness of the banks to close the loopholes! Why do they do so?
The simple reason is because this costs them money. I’ve previously written about E-Wallet top-ups and the Merchant Discount Rate (MDR) here, but for simplicity, I shall repeat my diagram:
But, if the banks earn some MDR, why do they lose money? Well, the bulk of the MDR actually goes to the card scheme (e.g. Visa / MasterCard, which is why you see so many Fintechs charge extra when you use Visa to top-up or spend), so if the bank is giving you the rewards or cashback, it likely costs them more than the MDR that they earn from processing your transaction. Additionally, the banks have to give you an interest-free loan for the duration of the charge on the card (usually around 1.5 months or so, depending on when you spent and when your bill is due), and that is a drag on their capital since they usually have an internal cost-of-funds metric.
Hence, once a popular way is discovered, banks and Fintechs will move quickly to ban it. Some of those that have lingered (until recently) are a particular cashback card that still gives you cashback for topping up E-Wallets, and a particular payment card — but the writing is on the wall. Enjoy it while it lasts.
Next, let’s discuss the perennial debate: miles or cashback?
2. Miles vs. Cashback
Whether you choose miles or cashback is ultimately a function of your needs and wants. Either way works with MS, if there is a method to be found.
I’ll list some of the pros and cons of each:
In the end, it is really your preference. If you travel frequently and want to be able to fly first or business class, then perhaps miles are for you. Personally, I prefer cash because I don’t travel frequently and I fly budget when I can, so cash is better since redeeming miles for a budget flight is one of the worst things you can do.
Additionally, I actively try not to spend money. Some MS tricks for miles still require you to spend money, because you will essentially be “buying” miles on the cheap. But, I’d rather not spend unnecessarily, so I prefer cashback.
3. Case studies and closed loopholes
Now, let’s explore some case studies and examine some of the closed loopholes.
“Why bother looking at case studies and closed loopholes”, you may ask, “since they don’t work anymore?”
Well, just with like any “exam” in Singapore, you start with the TYS, a.k.a. the Ten Year Series. Case studies and closed loopholes show you the ingenuity of the MS community, and they can also inspire you to seek out similar techniques using the same principles.
I’ll start with my favourite 3 case studies, draw the principles out from them, and discuss how to apply the principles in Singapore today. I’ll also show you a general list of closed loopholes and discuss some of the tricks that people did use in the past.
First, the case studies — the articles are linked in the sub-titles.
i. The guy that literally flew his way to first class
I’m revisiting this guy because his method is a classic way to MS, albeit not exactly MS-ing in the way I would do it. What he did was to spend weekends and holidays camping out at airports and snagging discounted tickets right before the plane would complete boarding, thereby “buying” miles cheaply and literally flying around in circles in the US (from state to state), and ending up back where he started once the weekend ended. This is a typical example of spending small amounts of money for massive amounts of miles.
Well, this is not replicable in Singapore simply because we don’t have inter-state flights, nor are our flights so cheap that they will try to sell excess seats at a massive discount — if anything, our flights are all overbooked. While there is also a legit strategy to “game” the system by buying tickets and volunteering to get “bumped” (i.e. to forgo the flight ideally for cash, or hotel vouchers), but that is riskier since you cannot predict whether they will actually bump people from the flight.
Additionally, as anyone who has flown a lot will tell you, flying so often has negative implications for your health. The guy admitted as such in the article too. If you are into ESG, you would also know that flying around pointlessly is a huge source of carbon emissions, but then you can also argue that since the plane was going to fly anyway, you might as well be on it if there are empty seats. Go figure.
So, what is the principle here? It is to literally “buy miles” as cheap as you can. In Singapore, there are a few ways you can “buy miles”, and the most common way is by paying the annual fee. Typically, miles optimisers will try to buy things and earn the miles as a bonus (that’s where you get Milelion and the like trying to optimise for 4 “mpd”, or miles per dollar), but for MS, that’s not good enough because you can’t actually spend so much money. So, what some folks do is milk the annual fee for all its worth, since it is one of the better ways to literally buy miles. I’ve heard of folks who request to pay the annual fees multiple times just to get miles, but your milage may vary (pun intended) because not all banks will grant that request.
ii. The guy who had a super sweet tooth
This guy managed to clock up miles by exploiting a loophole in a promotion — for chocolate pudding.
As part of a promotion, the airline tied up with a chocolate pudding maker to give away miles every time someone bought pudding. However, it seems like someone failed math and this guy realised that the cost of the pudding was a fraction of what the miles were worth, so he managed to earn over a million miles by stockpiling pudding at a discount store, thereby allowing him to spend $2.50 for 1,000 miles, or some other absurd exchange rate.
He ended up giving most of the pudding away (as he had to open the pudding to claim the miles), and there is a limit to how much pudding you can eat.
What is the principle here? Well, it is to be good at math! This kind of promotion “abuse” still occurs regularly, even in Singapore. However, it is limited to the sign-up bonuses for miles cards, usually structured as “spend $X within the first Y months to get a bonus of xxx,xxx miles!”. If you do the math, the miles awarded per dollar spent are usually way more than your typical average spend.
But, how do people chalk up so much spend within a short time frame? Well, if you don’t have supplementary cardholders, people usually just buy vouchers (e.g. NTUC vouchers) since those vouchers can be sold (true MS) or spent later (bringing forward the spend). Most of the other MS techniques to hit this kind of minimum spend have been excluded.
iii. The guy who literally bought money (my personal favourite)
This is my personal favourite because it is true MS — he didn’t pay anything and managed to get a float because the credit card bill comes one month after the payment.
What happened was that the US Mint wanted to introduce new $1 coins, and they allowed people to use credit cards to buy them from the Mint’s website. So, what this guy did was to buy up all the $1 coins he could, then deposit them back to the bank.
Overall, he spent around $3 million buying coins and earning miles along the way. I’m surprised that he managed to do so even if it was spread out — $3 million is a massive number.
What is the principle here? Well, it is to buy cash equivalents that can be cashed out easily, and to use that to pay off the credit card bill (and earn interest while doing so!). Essentially, this operates almost like a free balance transfer, but buyer’s beware — some banks have included in their T&Cs that any cash equivalents bought will incur cash advance fees (the most horrible type of fee, because it starts from the day of drawdown).
In the US, people do this by buying gift cards, but gift cards typically come with a fee when you try to activate it and cash out. They also have a mechanic where people can open bank accounts and use a credit card for the initial deposit — but these don’t really work here.
So, what do people in Singapore do? They top-up E-Wallets. One of the most popular wallets just killed a loophole whereby you could then top-up another E-Wallet, but the people moaning about that don’t realise that it was an old, old trick — back in the day, there was a bank that gave you 10% cashback for topping up the E-Wallet, so I was already using that loophole until the bank ended the promo and the loophole closed. I didn’t realise the loophole was still active, but I’ve moved on since this method is also capped at $30k a year of notional spending, which means the cashback is “only” about $500 a year. There are better ways ;).
Now, let’s take a closer look at the closed loopholes and glean some ideas!
Closed Loopholes
Now, each bank will have its own set of exclusions, but most of them overlap. So, let’s just take one of the T&Cs for discussion. I will comment on each exclusion with the loophole that they are trying to close (or, at least my best guess).
a) payments made via AXS, SAM and eNETS;
If you are trying to MS in Singapore, the AXS machine is the mother lode of all MS. In the past, people would just top up things and use those things at the AXS machine to pay off the credit card bill — and rack up huge amounts of points that way.
The AXS machine also comes in handy if your money gets stuck somewhere, because you can typically use it to at least pay some bills to extract the money.
So, even though it is excluded in most T&Cs, the AXS machine is your friend. Learn how to use it.
b) payments made via CardUp, FavePay, iPaymy and SmoovPay;
Again, this was a favourite amongst miles hackers because they could pay the processing fee (approximately 2%) to CardUp and then use their miles card to pay for things that you typically couldn’t use a card for (e.g. rent). Not so hot for what I do because I want to avoid paying fees in the first place, and the cashback usually isn’t enough to cover the transaction cost.
So, this has fallen out of favour for now but you should monitor this space because the payment space is evolving very fast. There are new Fintechs sprouting up every year offering a new way to pay. Act quick and you can reap some cashback or miles before the banks exclude them.
c) payments to educational institutions;
I’m guessing this one just boils down to the “unavoidable fees”. And also, because there is a financial product called a “tuition fee loan”, so of course the banks would rather you take up a loan with them than to use a credit card to pay off your tuition fee and get points or cashback while doing so.
But, just because it is excluded, doesn’t mean it’s not a good idea to do so still, if the educational institutions accept credit cards (since there are ways to stretch out your payment without paying interest). However, many places have also caught on to the MDR issue so they will ban credit cards and choose to accept PayNow or bank transfers instead.
d) payments to financial institutions (including but not limited to banks, online trading platforms and brokerages);
This is the equivalent of buying money. As mentioned, in the US, you can use a credit card to put down the initial deposit when opening a bank account. I’m also guessing that smart people have used this to “buy” things like money market funds with their cards to earn miles, only to liquidate them.
Again, this doesn’t really make sense from the cashback angle because brokers usually charge you a fee (MDR again) if you use a credit card to fund the account. So, it only makes sense for the miles hackers because they are willing to spend a bit of money to get some miles, whereas the cashback folks will avoid fees like the plague.
e) payments to government institutions and services (court cases, fines, bail and bonds, tax payment, postal services, parking lots and garages, intra-government purchases and any other government services not classified here);
Again, the “unavoidable payments”. I’m guessing that the banks don’t want to give points for payments that you will have to make anyway, since the point of them giving points (pun intended) is to encourage you to spend on other things, not just to use the card on fees that you already have to pay.
Tax payment is an interesting one. Some cards still do give you miles for paying your income tax, but it is a limited scope. I guess this was because previously, some smart folks overpaid to IRAS then wrote in to get a refund. That is a dangerous game because IRAS could have just denied them the refund and say it would count towards next year’s tax bill, or worse, say it is considered a “donation” to the government and give you 250% tax deduction for the amount instead. So, use this at your own risk.
f) payments to hospitals;
Another “unavoidable fee”, nothing much to see here. Not sure if enterprising people did the same thing to overpay because hospitals will refund you if you overpay them for treatment.
g) payments to insurance companies (including but not limited to sales, underwriting and premiums);
Ah, this one had a golden trick — it was called the free-look period. What some people did was to buy huge amounts of insurance, pay with the credit card, then free-look it. Because the insurers don’t talk to the banks, the bank wouldn’t know that the insurance was free-looked and the cardholder gets the points and his/her money back. That is pure MS and the source of pain for many insurance agents.
I guess this technically still can work but you don’t get points, but instead you get some float (beware the time lag for the refund though). So it depends on how many insurance agents you can churn this on until they blacklist you.
h) payments to non-profit organisations;
You already get a tax deduction for this, so the banks don’t want you double-dipping. The NPOs also have caught on to the MDR so if you note, they will start charging an extra fee for using a credit card instead of PayNow.
i) payments made via online banking;
This is another golden source of MS, because you can just keep paying everything off and the money moves in a circle. Most banks have already blocked this (see the AXS line above) because in the past, you could just use the AXS machine to pay off a credit card bill with another credit card.
j) payments to professional service providers (including but not limited to accounting, auditing, bookkeeping services, advertising services, funeral services, legal services and attorneys, and Pay+Earn);
Looks like another one of those “unavoidable fees”. I know lawyers can hold your money in custody and potentially return it to you later, but I haven’t heard of people who actively engage a lawyer just to MS. Also, there are strict laws and regulations about lawyers handling clients’ money, so it is unlikely a lawyer will go near that line. Hence, try at your own risk.
k) payments made via telephone or mail order;
Who still uses these in this day and age?
l) payments to utility bill companies;
Again, “unavoidable fees”, and there have been some folks who (again) pre-pay their utility bills so that they can meet the minimum spending in that month. I’ve not heard of utility companies refunding you, but given this is a monthly recurring charge, pre-paying to meet the minimum spending is a legit strategy since it will wash out fairly quickly.
m) any top-up or payment of funds to payment service providers, prepaid cards, any prepaid accounts or purchase of prepaid cards/credits (including but not limited to EZ-Link, GrabPay, NETS FlashPay, Razer Pay, ShopeePay & Singtel Dash);
Ah, this was the mother lode of “buying money”. Similar to the gift card trick in the US, using credit cards to top up any form of E-Wallet that can be cashed out is basically giving yourself a free balance transfer.
Of course, the E-Wallet service providers have also bled out so much MDR and they need to stem the bleeding. As I pointed out in my previous article, once they can accept PayNow payments, they will discourage the use of credit cards. That article proved prescient as most major E-Wallet providers charge a fee if you use a Visa card now (Mastercard is cheaper and many of them also issue Mastercards, so it is likely they managed to cut a better deal with Mastercard for the MDR).
n) any betting transaction (including but not limited to levy payments to local casinos, lottery tickets, casino gaming chips, off-track betting and wagers);
I guess this is a public service as well as a way to stop MS-ing, especially if you can just cash out the top-up (e.g. buying casino chips then cashing them out immediately without gambling).
o) any transaction related to cryptocurrencies;
This is an interesting one. Crypto has been both hot and cold for credit cards, mainly because of the huge MDRs that are charged (I recall a 7% charge for using a credit card to buy Bitcoin back in the day). Of course, with the rise of stablecoins and the ease of exchanging such coins back to fiat, this is one way to “buy money” and get points if they didn’t exclude it.
p) any transaction with transaction description “AMAZE*”;
This is the first bank to exclude the Amaze card, likely more is incoming.
That said, the Amaze card is still useful, so I have put my referral link down below as well.
q) instalment payment plan purchases, preferred payment plans, balance transfer, fund transfer, cash advances, annual fees, interest, late payment charges, all fees charged by “XXX BANK”, miscellaneous charges imposed by “XXX BANK” (unless otherwise stated in writing by “XXX BANK”);
These are just fees, some are avoidable, but they don’t want to give you points for paying their fees!
r) any transaction subsequently cancelled, voided, refunded, or reversed for any reason; and
I guess this is a common sense exclusion, because the reversal or voided transaction will be refunded to your card anyway. The bank is not going to give you points to buy refunded things.
I’m also guessing that some people have transacted huge amounts then sought refunds before…
s) any other transaction determined by “XXX BANK” from time to time.
The mega catch all which allows the banks to move fast and exclude tricks that are popular before they update their T&Cs. This is why it is dangerous to discuss MS in public, because the banks will just exclude it once they catch wind of it.
So, I do hope you got some gleanings from studying history! There are some loopholes that still exist but of course I’m not going to talk about it here… You will need to have a private discussion for those ;).
Anyway, to round up the article, I will summarise the key tips and tricks, and include my referral links if you would like some free cash.
4. Tips, tricks, and referral codes for free money!
Well, the first tip I have for you is that you need to be willing to explore. Many of the MS loopholes are not public for the reasons I have mentioned above, so there is no point writing in to the banks to ask (they either wouldn’t know or they will exclude it), so the only way is to test it out. So, start small. Don’t try some newfangled method with $10,000 and then realise you can’t get your money out and it gets stuck there. Start with small amounts and ensure that everything is working as intended, then scale up.
The next tip would be not to kill the golden goose. While you can scale up, please don’t scale up to ridiculous sizes (e.g. the $100k a month example I gave earlier) since those will raise red flags all over your account, and those are not things you want to have. Personally, even though I know there is a maximum cap for the current technique I am using, I have never maxed it out. I keep it reasonable to ensure the longevity of the technique.
This next tip depends on whether you are chasing miles or cashback.
If you are chasing miles, then refer to the case study on the chocolate pudding: always do math and chase promotions. You will need to be very alert because most promotions are time-based, so you will need a reliable way to bring forward spending (e.g. vouchers) if you want to qualify.
If you are chasing cashback, then refer to the case study on buying money: always be on the lookout for new payment methods and cash equivalents. If there is something that can give you at least one-month of free float, that is enough for you to minimally earn some risk-free money (via interest in the deposit accounts), especially in this era of tightening interest rates and increasing FD rates.
Just remember to have enough liquid assets to settle the bill should there be a hiccup midway and you need to liquidate. That happened to me when a fraudulent transaction hit my card — having to get a new card ruined my plan and dented my deposit balance, but at least I managed to re-fund everything once I got my new card.
A side note on the reason why I like the “one-month free float” — this basically gives you a permanent increase in your deposit account until something breaks and it washes out. This is because the credit card will let you carry a credit balance for at least one month before you have to pay the bill.
So, to earn some free money, you just need to charge half of your credit limit to the card every month. During the first month, the money sits in your bank account, earning interest for you. The second month, the bill arrives, but you can charge the other half of your limit and use that to repay the credit card bill.
The net effect is that you have half of your credit limit sitting permanently in your deposit account earning interest. This is why my favourite case study is about the guy who managed to literally buy money — he earned free interest in addition to the miles.
Lastly, DON’T GET INTO DEBT. This is very important. The whole point of MS is to earn free money, not pay people money. If you can’t control your spending in the first place, or are very forgetful and don’t pay bills on time, etc., you will end up losing huge amounts of money. It is better that you just cut up all your credit cards rather than play with fire.
On the other hand, if you have the iron discipline to only spend what is necessary on the card (i.e. use the card as if it was cash and not roll over spending), then MS may be for you if you are willing to dig and experiment.
Finally, some referral codes:
Amaze card by Instarem
My referral link is here. If you can’t access it, you can use the code V2yrdi when signing up.
Yes, even though they have nerfed things and banks may start to exclude Amaze, there are still things you can do with the Amaze card that you can’t do with a credit card. Just go get it first before all the loopholes close.
Standard Chartered Credit Cards
This is just for some free money. When the Trust card launched with $25 NTUC vouchers for referrals and free rice, I rolled my eyes at the offers but the team sure did nail their target market (well done, Gloria!) and people went absolutely bonkers referring everyone they knew for those rewards. I mean, I regularly check websites like Singsaver for juicier sign-up rewards, and the mother bank of Trust (StanChart) does have one referral reward, albeit starting to get nerfed: it now stands at $80 cash each for referring a friend, which is way better than $25 of vouchers (IMO! I guess I’m not their target market).
You can find my link here. If I recall correctly, you just need to activate the card. I don’t recall if there is any minimum spending, and if you are a new cardholder, you can get some more free money from SC (up to $300 in total unless they changed their T&Cs).
Way better than $25 but somehow no one cares… Which is odd. So here you go, I do care about more free money, so come and collect it with me!
I hope that this article helps you understand Manufactured Spending better, particularly in the Singapore context. If you would like to discuss (privately) about the techniques, please feel free to reach out to me! I’m always happy to discuss and swap tips. If you already happen to be hanging with a group that discusses these things, please add me in too! It definitely helps to discuss and bounce ideas around — you’d never know what comes out of it.
Happy MS-ing and remember to stay debt-free!
