The Cashback Arbitrage (Read: Free Money From Manufactured Spending) That I Didn’t Want To Share
Well, it is time to break the silence.
PUBLIC SERVICE ANNOUNCEMENT
Even more sadly, Amaze is extending the 2% fee for using your Amaze wallet to top up another e-wallet, from 5 July 2023. So this trick can be resigned to the “closed loopholes”, but from now till 5 July, max out your limit!
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Sadly, it seems that Amaze is patching this because they are introducing a 2% fee for topping up your GrabPay wallet with a linked card, from 20th Feb 2023 onwards.
So, this trick will only work from now till 20 Feb 2023. I initially published this article way back in 2021 or 2022 but pulled it down because I was warned that someone along the value chain might nerf it — so since the nerf is here, I will re-post the article for this last week of manufactured spending before the fee kicks in. Make hay while the sun shines, and max out your limit this week!
My article, with some updates for this 2% fee, is reproduced below.
It seems that this little secret wasn’t as much of a secret as I had initially thought it was, because bloggers like MileLion have already covered the key aspect of it. This is typically a double-edged sword for miles hackers, because once their tactics get publicly exposed, the credit card companies will start to exclude that particular tactic from earning miles.
However, since I usually go for cashback and not miles, I do not subscribe to a lot of their manufactured spend or card spend optimisation because it seems like a lot of work for airline miles that, post COVID, are harder to redeem.
Instead, I focus on earning cashback and true arbitrage, i.e. a risk-free profit. While the nature of a risk-free profit means that it is small, it is still free money.
So, what is this little secret, you may ask?
Well, it involves three different players, and it is due to the unique value proposition that each player brings to the market. Taken in silo, they each do provide a good value proposition, but together… they give you free money. Who doesn’t like free money?
So who are they?
Revealing… The Triumvirate of cashback arbitrage / free money.
Let’s break them down in detail. Firstly, and the enabler of this, the Amaze card by Instarem.
Amaze by Instarem
The value proposition of the Amaze card is that you can get an additional 1% cashback for qualifying spends when you pair an existing Mastercard with the Amaze card. So, the miles hackers will link their miles cards to Amaze, allowing them to get 1% cashback on top of their existing miles.
If you like the sound of that, you can apply for one using my referral link (https://referral-link.onelink.me/gbf1/a43c48ca?referral_code=V2yrdi), or using the code V2yrdi when signing up.
But, that’s not all! The magic of the Amaze card is that it is a debit card, not a credit card. This is a key point to note, and set my arbitrage senses a-tingling. This is because of the functionality of the next member of the Triumvirate — GrabPay.
GrabPay by Grab
While you technically don’t need a GrabPay card to utilise this trick, it doesn’t harm you (in case it stops working, at least you can use the balance!).
If you didn’t already read my previous article, I already mentioned that with DirectFast, the e-wallets will start to open up and allow you to transfer the balances out of their wallet. But, due to MDR issues, they typically only allow this for debit and PayNow transfers, not credit card transfers.
So, before the Amaze debit card came rolling along, if you used a credit card to top-up your GrabPay wallet, you couldn’t transfer it out. But, because Amaze is a debit card, you CAN transfer the balance out. This was the not-so-secret secret that MileLion covered way back (I now realise), and so, if MileLion already covered the fact that you can use your Amaze debit card to top up your GrabPay wallet to take out the money… They would have closed this already. The fact that it still works means that it is intended to work this way (update: famous last words…).
If you recall, you will pair a credit card (albeit a MasterCard) with the Amaze card. So, while you don’t get any miles or cashback for doing so, you are able to get a free float by topping up your GrabPay wallet with the Amaze card and then withdrawing the balance to your CASA.
“Great”, you may think, “but I have to pay my bill at the month-end, so this just gives me a one-month free float. What’s so exciting about that?”
That, my friend, is there the last member of the Triumvirate, the OCBC Cashflo Card / OCBC NXT Card, comes in.
OCBC Cashflo Card (now OCBC NXT Card)
The OCBC Cashflo Card (rebranded as the OCBC NXT Card) is the OG of BNPL (buy now pay later), since it automatically splits transactions above $100 into 3 monthly instalments, and transactions above $1,000 into 6 monthly instalments.
If you have read until now, you would be able to see how this works.
By linking my OCBC Cashflo Card / OCBC NXT Card to Amaze and topping up my GrabPay wallet with at least $1,000, I can then take out that money and put it in my bank account while repaying it in 6 monthly instalments.
This then allows me to have 6 months of free float!
But that’s not all. I can continue to top up my GrabPay wallet every month and repeat the process. For ease of calculation, let’s use $3,000 as the top up amount and see how this works:
Wow, is that a FREE $10,500 I see?
Given that on month 7, the payment from month 1 washes out (i.e. you would be billed the last instalment), you will maintain the free float of $10,500 in your bank account — i.e., getting some free money.
What can you do with the free money? Well, since this is an arbitrage lesson after all, I do not recommend that you spend it. You can always leave it in your high-yield savings account, or you can park it in some robo-advisor’s money market fund.
[If you would like to show some support, you can open an account with Stashaway using my referral link, or Endowus with my referral link.]
This is pure arbitrage — a risk-free return on money. As long as you pay all your credit card bills on time, you would not get any late fees and your credit bureau score, ironically enough, would improve (because you have a good track record of paying your bills!).
Now, of course, there are still some minor issues that you need to take note of.
1. Any fees from the credit card / Amaze Card
Since the above trick just earns you the MMF or high-yield CASA interest, any fees from the credit card will eat it up. Hence, please ensure that you pay all your bills in full every time, and try your best to get a waiver of the annual fee.
WARNING: From 20 Feb 2023, Amaze has slapped on 2% fee on using a linked card to top up an E-wallet. So, this is the exact death knell for this trick because the interest you will earn will not exceed 24% p.a. (since it is 2% flat fee on the money, that works out to 24% p.a.).
2. The Payment Services (PS) Act cap for E-Money
As per the PS Act, there is a stock-and-flow limit to the amounts of E-Money that can slosh around — $30,000 on a yearly basis, to be exact.
Thus, if you literally used the above example, you would max out your GrabPay limit in 10 months and would be unable to use your GrabPay until the year is over (on a rolling basis).
Hence, the real maximum you should be shooting for, if you don’t intend to use GrabPay for anything else, is $2,500 a month ($30,000 / 12). If you regularly use GrabPay to earn points, then you should consider something lesser than that.
N.B. Upon further checks, it seems like Grab doesn’t count transfers to your own bank account under the $30,000 annual limit. So, exceed at your own risk.
WARNING: Since Amaze has introduced the 2% fee and updated it to include wallet top ups, topping up the Amaze wallet first will no longer work from 5 July 2023. So get your limits maxed by then!
3. You will not get any other points or cashback
If it was not clear by now, all the players have excluded E-Wallet top-ups from any kind of cashback or rewards. Do not expect to earn Amaze cashback, Grabpoints, or cashback on the Cashflo / NXT card from this. Your only earnings will be the interest earned from the free float, wherever you park it at (in a MMF or CASA).
TRUE ARBITRAGE!
And with that, it brings me to the end of this particular trick. While the earnings are slim, it just gives me a cheap thrill to discover arbitrage and earn some free money (again, who doesn’t like free money?).
I am eagerly awaiting all the new products that the FinTechs and new Digibanks will bring. I will conclude the same way as my previous post on this — keep your eyes peeled, understand the products, and you may discover some diamonds in the rough.
Of course, I will try not be a whistle-blower to spoil the market (which is why I didn’t mention this trick in my previous article) and kill the golden goose *side-eye at MileLion* but if the trick gets spilled out in the open, then well, all’s fair. Hopefully, since travel hackers will still focus on spending to earn miles and not arbitrage, I will be able to continue my little arbitrage hunting in the T&Cs of the products.
However, even if this particular trick stops working, I still have one up my sleeve that I do not see floating around in the blogs yet… We will see when that leaks. ;)
Update: sad to say, my previous conclusion proved prescient, albeit 1 or 2 years too early (and maybe it would have come earlier if I didn’t pull the article!). Oh well, back to the drawing board. For what it’s worth, I still do have some tricks but given all this tightening, I guess I have to play certain things close to the chest, and wait for the next round of loopholes to open up!
