Don’t Go Overboard! Why You Need an MS (Spending) Exit Strategy!

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manufactured spend exit strategy

The Gift Card Exit Strategy

Like many of you I purchase gift cards for a variety of legitimate uses including to pay my bills. When stores like Officemax/Office Depot have wonderful deals like we are seeing this week, it is tempting to stock up for the long haul. Go to store A, buy a bunch of gift cards, go to store B and buy more. Rinse, repeat. Before you know it you have thousands and thousands of dollars in gift cards.

Here is a photo I took from a similar Officemax promotion a couple of years ago. This isn’t even close to all of them either. I just couldn’t stop!

manufactured spend exit strategy
During this particular deal, all of the stores had run out of $200 cards, but I still opted for the $100s despite the lesser math and overall greater hassle. It took me awhile but I did eventually go through these cards because I had a plan for them and knew how to use them when I bought them. In other words, I had an exit strategy.

The Emergency Strategy

In fact, for those cards and most normal cards an exit strategy could be simple. Use a payment service such as PayPal or even a swipe service like Square (not recommended) to drain the cards and get the money back. You will of course pay about 3% in fees, but in an emergency that would be acceptable, especially considering the rebate and rewards. It is a good emergency backup plan.

Which brings me to this latest deal. In addition to regular Visa gift cards similar to the ones pictured above, Office Depot has new “Everywhere” Visa cards. These cards are titled things like “Dining Everywhere”, “Fuel Everywhere” and “Style Everywhere” among others. On the positive side these cards have a lower $4.95 fee compared to the $6.95 fee of the normal cards, however the issue is that they are restricted to select merchants. That emergency plan I mentioned above probably won’t work! (Although it could in the Square scenario if you code it right.)

Some Troubling Observations & A Story

manufactured spend exit strategy

This week I have noticed some chatter from people who purchased large amounts of these cards without knowing how or where they could liquidate them. (Especially the Fuel & Style cards.) This is a really really bad idea and reminds me of something. Let me take you back to 2013 and to something called the Home Improvement gift card.

Back in 2013 Office Depot clamped down on accepting credit cards for most reloadable products like Vanilla Reloads. They did however still accept credit cards (some that earn 5X) for the Home Improvement gift card. Better yet, this card had no fee, but it was only supposed to be used at home improvement stores. Then one day someone discovered it was PIN-enabled and could be loaded to Bluebird. It was a bonanza! People bought tons. And then the deal died, the PINs were shutoff and people were left floating a ton of money.

Buy, Liquidate & Don’t Float Too Much

So what is my point? Buy and liquidate. This past Sunday when the Office Depot deal went live, I spotted the Dining Everywhere cards for the first time in the wild. Instead of buying them exclusively, I bought some of the more expensive but more reliable normal cards. Then, I stopped along the way and confirmed how I could liquidate the Dining Cards and finally began buying more of them. The key though is that method could change. I thus liquidated quickly.

Of course this could all end the same way as the Home Improvement Gift Card which brings me to my final point. No matter how good a deal is and no matter how excited you are, never float more money than you are comfortable with. In other words, if I had had to float the Dining Everywhere cards for months if something crazy were to happen, then I could have. I would not have been happy, but it wouldn’t have caused serious financial issues.

Conclusion

I sort of think you should treat your MS like a business. Get excited about good opportunities but don’t let them cloud your judgement. You are in it to maximize your returns and to minimize your investments. A simple mistake can be costly and for that reason you should always have an exit strategy and if in doubt remember that slow and steady doesn’t make you a loser!


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38 COMMENTS

  1. Kind of like sitting on eBay gift cards bought at a discount to purchase other branded gift cards. This was discontinued on 8/20. Luckily, I only have a couple of hundred eBay cards that I will be able to use on stuff. But there is quite a bit of chatter on SD regarding people who are holding thousands.

    • After reading the title I thought the article was going to be about Ebay gc. Is there anything in particular that you buy on Ebay that is a decent price?

      • svmgiftcards (who is the company behind a lot of retail-branded GCs) often does various gas station (ChevronTexaco, ExxonMobil, Sunoco, BP, Conoco, etc) gift cards at 92% or even 90% of face value (in case of ExxonMobil especially)

        Until ebay bucks on GCs was eliminated, that was an easy route to hit the 5+ balance in a 3 month period to be issued a certificate. Not much, but still something to roll later. Actually bought another two ExxonMobil cards today at 92 apiece, using my balance and falling just shy of the minimum spend requirement on my latest cc. (Still 60+ days to go in the bonus offer period!)

  2. Those new to the hobby need to proceed with caution. I’ve read countless stories of people stuck with thousands worth of gift cards and no avenue to liquidate. The landscape is also changing so quickly that you’d be foolish not to have a backup plan. Great article Shawn!

  3. Shawn..you obviously have alot of experience with volume. The way I’ve been purchasing these with my INK is 3x$200 every other day. I would probably do this 3x for a total of $1800 before the promotion runs out.

    I was wondering when you do high volume, do you do it multiple combos in one day or spread them over the week. like do you ever go to the register and run 3 transactions of $600 in one day?

    I’m trying to figure out how not to raise any red flags with chase besides the obvious of maybe showing a spike in spending in one week.

    • I do a lot of spending on my cards both in waves and sporadically. I also spend outside of office supply stores and have multiple Inks for multiple businesses. With deals like this, I try to minimize the number of trips I have to make, especially to far away stores.

    • Joe, some cashiers aren’t going to let you do more then $600 a day in multiple transactions(you can sure try though), but for sure at least be going in every day. The managers aren’t going to throw you out. I had one manager joke to me today that I’m going to keep bugging her every day this week, aren’t I? And I just chuckled and said, you bet! 🙂 Take advantage of the offer while you can, these don’t come around too often. I’ve picked up 63 VGC $200 variable load cards so far, and plan to pick up another 12-24 yet these next two days at different locations. Add a small $1-2 item if you can to make the amounts vary a bit. I’ve liquidated 39 cards and plan to do all the remaining ASAP Sat night after my very last run.

      I called Chase about something else and went ahead and mentioned I’d be doing a lot of purchases at Office Max this week, and the lady said, oh yeah, when Office Max does back to school sales then everybody goes crazy and they expect increased purchases, so I don’t think you’ll have any problems at all for the quantities your doing. If they call say you’re throwing [yourself] an office party and giving these as rewards or something. No sweat…

      • “I’ve picked up 63 VGC $200 variable load cards so far, and plan to pick up another 12-24 yet”

        wow, 63 VGCs? did u take them out of store for use later or what? that may have explained why i can’t find any $200 left on the racks, lol… or that u must have lived in a town where not many MS.

        • I know, right. I totaled 84 for the week, then. You snooze, you lose! 🙂 I think I got around 82K points and about $220 in cashback with the instant rebate. I converted them all to money orders already except for I still have 3 that I haven’t liquidated yet. Depositing them into my bank in the morning. What I discovered is that one store in a more rural area outside of a big city would often let me buy 4 separate transactions of $600. The manager hadn’t read the rules of the discount at all. Tickled pink.

          I hope this deal comes around again next year! I could dig that. 🙂

          • Shawn – isn’t MOs frowned upon by banks and may cause account closure of abused? I thought I read as much in some of the blogs. Still true? Still proceed with caution? Thanks.

          • There are people who do large amounts of money orders without problems, but yes banks do generally frown on them because of the reporting requirements. The number one thing to know about money orders is to make sure you don’t structure. Here is a post about that. http://milestomemories.boardingarea.com/money-orders-manufactured-spend/

            Often times banks will shut down accounts if large amounts of money orders are deposited simply to avoid dealing with the paperwork of reporting it to the government. It is a nuanced subject and one I obviously can’t give legal advice on given that I am not an attorney. All I can say is that many people do buy money orders without issue.

  4. We have bought close to $10,000. I was lucky to have my husband use his card at the same store. We tried about 6 stores. The manager has to come over for 3x $200, but 2 transactions at 2 x $200 rings up automatically with the discount. I am not sure which option is better. The Dining cards were great. I have liquidated half.

  5. Is there any issue with unloading gift cards at Walmart? I do 2 x $500 gift cards at Walmart, but I am afraid trying to unload 4 x $200 will draw attention to the fact they’re gift cards instead of real debit cards which can be problematic.

    • It depends on the store, cashier and even day. Yes, I have issues sometimes, but not always. If you are maximizing a good deal like OD and feel more comfortable doing a $400 MO with only two cards, then I don’t personally see that as a huge deal.

  6. Can you explain the Paypal emergency option a bit more? Do you have a second Paypal account with a separate login and linked bank account and sending money as a friend? Paypal does not let you send money to yourself. Please clarify.

    • You can send someone a payment with a credit card and they will be charged a processing fee for the payment. PayPal allows you to use prepaid cards. So I could send my wife a payment with the cards, but she’ll receive the payment minus the fees. Thus this isn’t an option one would do in anything other than an emergency. There are also other payment services that exist which would work similarly.

  7. One additional question: When it comes to MS and loading GCs via WM kiosks, does it matter Serve Cash Back v. Serve One VIP? Will the former work at kiosks as well (esp Metabank). That’s what I have currently. Or better ask Amex to change the card first? Thanks.

  8. Hi Shawn, could you help me understand your liquidation strategy for the dining everywhere/style everywhere cards?

    I read about Giftcardzen, but would be interested to hear if you have any other ideas. My dining everywhere was declined at USPS

  9. Hey Shawn – awesome blog! I remember the Office Max promo from Thanksgiving/Christmas in 2014 as well!

    Can you elaborate on how you are liquidating the dining everywhere cards? I’ve always used WM and MOs but would love any new tips/tricks!

    Keep up the good work!

  10. Many including me can’t liquidate the so-called everywhere cards even at WM. All depends on the card and the registers. Some cards might work and then you buy more only to find out those don’t work where you thought they would. Be very careful with those. I know some who are just going to eat out a lot or give the cards to someone as a gift to buy clothes with. And, some are donating them to charity, which gives them a small tax write off.

  11. Not sure if I’m reading it wrong but in your exit strategy it mentions PayPal. Are you using the gift cards to load PayPal or purchase PayPal gift cards then load PayPal? I thought the only way to load was a PayPal card. Thank you

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