Are office supply store Visa gift cards cheap or expensive?

This post was inspired by a comment left by reader net netty to my post on dealing with the new Visa gift cards being sold at Staples. S/he wrote:

"And I agree that everyone might have their own priorities but you are doing it wrong and giving bad advice if you are paying 6.95 per 1,000 UR pts."

This reminded me that it might be useful to write about how I decide between various methods of manufacturing spend: which techniques to use; which cards to use them with; and which to set aside for later.

Liquidation bandwidth is usually more limiting than purchase bandwidth

The simplest way to think about developing a manufactured spend strategy is by allocating your liquidation bandwidth across your current (and potential future) credit cards.

That usually means assigning bandwidth to your bonus-earning cards first; if the same $500 in spend will earn 500 Marriott Rewards with one card or 1,000 Ultimate Rewards points with another, the bonus-earning card is strictly superior, not least because Marriott Rewards is an Ultimate Rewards transfer partner.

A slightly different situation arises when trying to compare two different techniques with different price points and earning rates.

For example, Chase Ink cards earn 2 Ultimate Rewards points per dollar spent at gas stations, and 5 Ultimate Rewards points per dollar spent at office supply stores. The higher earn rate, however, comes at a higher cost: $6.95 per office supply store 1,000 Ultimate Rewards points, versus $4.95 or less per 1,000 gas station Ultimate Rewards points.

That means on a cost-per-point basis, gas station manufactured spend is the cheaper, and therefore "better," technique.

And indeed, in a world with unconstrained liquidation bandwidth, that would be the end of the analysis.

But in the real world of liquidation constraints, the analysis is turned upside down! The same 1,000 Ultimate Rewards points earned at office supply stores use up just $200 in liquidation bandwidth, compared to the $500 used up by gas station gift cards.

A travel hacker with access to only these two techniques and $5,000 in monthly liquidation bandwidth could earn 15,000 more Ultimate Rewards points monthly by choosing office supply stores over gas stations. Even if you value Ultimate Rewards points at just 1 cent each, office supply stores produce a small profit of $25.75 over gas stations.

That's because $1,000 in liquidation bandwidth costs $34.75 in office supply store activation fees and earns 5,000 Ultimate Rewards points ($15.25 in profit). Gas station fees for $1,000 in liquidation bandwidth are just $9.90, but that spend earns just 2,000 Ultimate Rewards points — and just $11.10 in profit.

Of course there are other liquidation constraints: office supply stores may sell cards that are easier to liquidate at Walmart, while gas stations may sell harder-to-liquidate Vanilla-branded gift cards.

On the flip side, for many people time is the most important liquidation constraint, and 25 $200 cards are without question more time-consuming to liquidate than 10, $500 cards.


Hopefully this post illustrates the importance of taking a liquidation-first approach as you develop your own manufactured spend strategy: allocate your liquidation bandwidth across all your credit cards and manufactured spend techniques, starting with the cards which maximize the value of each liquidated dollar. Usually, that means using your highest bonus spend categories first, and only then working your way down to unbonused (but hopefully still-valuable!) credit card spend.