Manufactured spend with and without promotions and bonuses
/On my way to the store the other day I realized that we hadn’t seen a really good grocery store promotion in a while. The beginning of December featured a Safeway deal for $10 off $100 in Visa gift cards, and Giant offered gas points on Visa gift cards during a similar period, but it’s been a slow couple months since then.
It occurred to me that it might be useful to write up a list of the most common promotions we see come up repeatedly, and why they’re worth watching for. These aren’t secrets, in fact the public travel hacking blogosphere and Twitter typically blow up each time they come around, but rather a sort of index of the most valuable promotions so less-experienced folks might learn what to watch for.
Grocery Stores
Grocery stores are one of the most widely, albeit not universally, available merchants for manufactured spend, since they’re present in most larger communities and typically sell one or more brand of PIN-enabled prepaid debit cards.
Without promotions, manufacturing grocery store spend depends in large part on the cards you have available. I think of grocery store spend as giving me “about” a 50% discount off paid travel, with the US Bank Flexperks Travel Rewards earning 2 Flexpoints per dollar (worth 1.5 cents each), and the American Express Hilton Surpass earning 6 Honors points per dollar (worth “about” 0.5 cents each, albeit with the possibility of much higher value redemptions at top-tier properties and on 5-night award stays). The American Express EveryDay Preferred and Gold cards offer 4.5 and 4 Membership Rewards points per dollar, respectively, although with certain additional restrictions (I do not currently carry either card).
That’s a solid core savings on paid travel, and these days it represents the majority of my day-to-day manufactured spend.
During promotions, grocery store manufactured spend can be profitable even if you don’t hold those cards (and even more profitable if you do). The three main types of grocery store promotions are cash discounts, grocery discounts, and gas discounts.
A cash discount is the best form any promotion can take, and you should always be on the lookout for them. Here are some recent examples, and what to watch for:
Safeway: $10 off $100 in prepaid debit cards. For all such promotions, always pay attention to whether the terms apply to “$100 gift cards” or to “$100 in gift cards.” The former language may mean the promotion requires you to buy lower-denomination, fixed-value cards, while the latter language means you can apply the promotion to higher-denomination, variable-value cards. The “good” version of this promotion was available in September (Visa), October (MasterCard), and November (Visa and MasterCard) of last year. An example of the “bad” version was offered in September on MasterCard gift cards.
Giant Eagle: $10 off $100 or $150 in prepaid debit cards. This deal was offered in June and November (Visa) of last year, and in December of 2018 (MasterCard).
A grocery discount is a promotion that requires you to buy “something” in addition to a prepaid debit card in order to realize your savings. It’s not quite as valuable as a cash discount, because it virtually guarantees “breakage:” buying items in excess of the required amount in order to trigger the discount. If a promotion gives $15 off $15 in grocery purchases, you’re likely to grab items costing $16 or $17 in order to make sure you’re over the threshold to trigger the discount. Some recent examples:
Giant: $15 off $15 in groceries when you buy $250 or more in Visa gift cards (June) and $10 off $10 in groceries when you buy $100 in Visa gift cards (July).
Hy-Vee: $10 Hy-Vee gift card when you spend $125 on Visa gift cards (December, 2016). This form of promotion is actually slightly more flexible than a grocery discount since Hy-Vee gift cards can be spent on a wider range of items.
The final form of grocery store promotion, gas discounts, is the least valuable. I don’t say that because I don’t own a car, but rather because unless you literally drive for a living it’s virtually impossible to redeem as many gas points as you can earn during a single week’s promotion.
Take for example a typical promotion offering 3 fuel points per dollar spend on Visa gift cards at Giant. The first $500 Visa gift card you buy earns you $1.50 per gallon off your next tank of gas, worth $15 on a 10-gallon tank of gas, or $30 on a 20-gallon tank of gas. That’s a good deal, better even than the fixed cash or grocery discounts discussed above.
The trouble is, unlike cash or groceries (at least the canned, paper, and cleaning goods I typically buy), gas points both expire and are worth less, the more of them you earn. Filling up a 20-gallon tank twice in a month might be reasonable. Filling it up 4 times in a month is possible if your commute is long enough and your fuel efficiency low enough. But at that point you’ve only accounted for four $500 prepaid debit cards, $2,000 in spend, and perhaps $60 in credit card rewards. That lack of scalability is why I consider gas promotions to be the lowest-value grocery store promotions.
Office Supply Stores
Like grocery store manufactured spend, office supply store manufactured spend has the feature of being worthwhile all the time on cards that bonus office supply store spend, but much more broadly profitable during periodic promotions.
Without promotions, someone with a Chase ink Plus, Bold, or Cash card can simply buy $300 Visa gift cards from Staples.com, paying an $8.95 shipping fee and earning 1,545 Ultimate Rewards points per card. At 1.25 cents per point this is again a minimum discount of “about” 50% off paid travel booked through the Ultimate Rewards portal, with an even higher discount if you also carry the Chase Sapphire Reserve and redeem points for 1.5 cents each.
But during promotions, even unbonused office supply store spend may be worthwhile. When Staples waives activation fees on Visa or MasterCard gift cards, your only cost is your time and liquidation fees. Earning 300 Ultimate Rewards points with a Chase Freedom Unlimited while paying $1 in liquidation fees sounds to me like a good deal. At that point, the question simply comes down to whether or not you can scale the deal.
Likewise, when Office Depot and OfficeMax offer $15 off $300 in gift cards, as they did in December, it doesn’t really matter what credit card you use to earn rewards, since you’re virtually guaranteed to come out ahead no matter what.
Conclusion: promoted, unpromoted, or unbonused?
There are, of course, unbonused manufactured spend opportunities available year-round, like the Vanilla prepaid debit cards available at many drug stores, the Metabank cards available at Simon Mall locations, or the lower-denomination fixed-value cards available at stores like Bed Bath & Beyond.
The interesting question is: what is going to make you spring into action? if you’re grinding it out, manufacturing spend all day every day, then any given promotion on any given day is just icing on the cake, perhaps encouraging you to free up some credit limit headroom to maximize it on your most valuable credit cards, but nothing more.
On the other hand, even if your time is too valuable to justify manufacturing spend on a day-to-day basis, there may be promotions that come around every month, quarter, or year that motivate you to wring every last dollar, roll of toilet paper, or tank of gas out of them.
The calculation is up to you, but hopefully the suggestions above help get you on the right track.
