Churning Credit Rewards for Thousands of Dollars a Year…

by Stealthy Rich · Published September 3, 2018 · Updated November 29, 2018

One thing I’ve done over the last few years is “churn” credit card rewards. And I’m not just talking, make the minimum spend requirements to get a bonus type of churning, but real makin’ butter type of churn. Some people call it manufactured spending, but that’s not as cool sounding. I just want to say, I was doing this before it was cool before any of the bloggers or frequent flyer bloggers told all of my secrets. I’m sure I wasn’t the original but I came up with some pretty crazy ideas and they worked brilliantly and scaled to incredible levels. I have a gift for finding loopholes in systems and exploiting them. Nothing that I did here was illegal but it definitely wasn’t for the faint of heart as I had many thousands of dollars floating at any given time. It required lots of social engineering and testing what was too much or too greedy.

Churn and Burn

Also, I don’t really do churning anymore either, mainly for 2 reasons; First, all the banks have nerfed the best reward cards by capping them at some ridiculously low level or lowering the reward entirely. (I don’t get out of bed anymore for anything less than 2%) Second, the real estate has gotten so lucrative, that it has taken all my spare time and energy, and frankly its more fun and sustainable. After you read some of my stories you might not believe me. My business partner would always joke with me that someday he’d convince me with RE that the churn was not worth it anymore, and, frankly, he was right!

But let’s get back to churning… here was the general premise of what I would do.

Acquire some type of reloadable debit card or prepaid debit card with a credit card.
Be selective where I acquired these cards so that I maximized credit card rewards. (drugstore, grocery store, gas stations, etc.)
Use the debit card or gift card to purchase a money order for the same amount as money on the gift card.
Sign the money order over to myself, and deposit in my checking account
Pay off Credit card balance with proceeds from money order.
PROFIT (from credit card rewards from step #1)
REPEAT

So here’s an example of how this would go down. I had several different variations to this process but it generally was the same.

Use my Amex Blue Cash card which got 5% at grocery stores and drugstores after you spent $6,500. This was roughly 3 days of spend for me so no big deal to hit this target each January.
Go to Kroger and purchase the following card. I would typically try and buy 4 or 5 but we will stick with one for this example. It costs $500 (the maximum you can put on it) and it has a $5.95 fee so the total cost comes to $505.95
With this card I would quickly call the 1800 number on the back (stored in my phone) and reset the pin to “1111” All of these cards were pinnable, thanks to Obama, which means they used the interlink system like a debit card so they didn’t incur high transaction fees when making purchases with the pin. Why is this important? Well, it means we can use them to buy money orders… YES!
Proceed to the customer service desk of your grocery store and purchase a money order for 500 minus the cost of the money order. In my case, it was .69 cents so I would buy one for 499.31 + .69 which would total to $ 500.00. Use the gift card you just bought and drain that sucker to zero.
Then with your $499.31 money order, deposit in your checking account, hopefully with an app on your phone.
Pay off your credit card with money you just deposited into your account.

So when I explain these steps to people, nobody ever gets it… Not sure why. I like to think of the steps in three main parts, I’ll steal a quote from one of my favorite movies, “The Prestige”.

Magically Make Money

Every great magic trick consists of three parts or acts. The first part is called “The Pledge”. The magician shows you something ordinary: a deck of cards, a bird or a man. He shows you this object. Perhaps he asks you to inspect it to see if it is indeed real, unaltered, normal. But of course…it probably isn’t. The second act is called “The Turn”. The magician takes the ordinary something and makes it do something extraordinary. Now you’re looking for the secret… but you won’t find it, because of course you’re not really looking. You don’t really want to know. You want to be fooled. But you wouldn’t clap yet. Because making something disappear isn’t enough; you have to bring it back. That’s why every magic trick has a third act, the hardest part, the part we call “The Prestige”.

The Pledge: Buying the cash equivalent with rewards credit card of some sort.
The Turn: using the cash equivalent to buy a Money Order
The Prestige: Bringing it back to your bank account by depositing it in your own bank account and then paying off your credit card.

This the classic card I had so many of from my favorite grocer.

Accounting

Rewards: 5% of 505.95 = $25.30 since it was grocery spend and I used my Amex blue which gets 5% back at grocery and drugstores after you spend $6,500 in a calendar year.
Transaction costs: $5.95 for the card, and .69 for the money order for a total of 6.64
Total Profit: $25.30 – $6.64 = $18.66 or roughly a 4.9% rate of return for 10 mins of your time.
Plus it’s tax-free money since the government views credit card rewards as merely “rebates” and not income. Yahtzee!

Lots of people will balk at this “paltry” amount of money. But if you get good at this, and I got really good at this, you can scale to unimaginable proportions.

SO MUCH MONEY!!!! Scaling is the key.

Now for the crazy part. I scaled this to almost a million dollar operation each year for several years. 3000 dollars a day x 5 days a week X 50 weeks a year equals $750,000. (2-week churning vacation) Some days I’d do more than 3k if I was feeling optimistic or had a few extra minutes to go to another grocery store.

And so you know I’m not making this up. Here are the spoils from 8 months worth of work. 10 mins a day. Don’t worry they are all drained to zero 🙂