Apparently, there are a bunch of people who totally take advantage of the system.
I'm not really saying that it's wrong. It's pretty ingenious, but it takes some effort but I don't really do it.
Sometime back, the Standard Charted Manhattan card gives a 5% cashback for spending $3000 in a month, to a max of $200 cashback per quarter. Some folks go down to SP Services in whack a full $3000 prepayment for their utility bill. Which is pretty smart, considering that the bill eventually needs to be paid, and they get a 5% discount off their utility bill. The thing is, I don't think that SP Services pay Standard Chartered a lot of processing fees. So the bank probably makes a loss on such transactions. Somehow, I think SP Services or Standard Chartered caught on to it and now you can only pay 2 months' prepayment using the average of your last few month's bill.
If you think it's worth it, you still can prepay your telco bills though. It is still possible to swipe $3000 into your telco bill, but STB Manhattan card now only gives a 3% rebate after spending above $3000.
I also heard of people who used their STB Manhattan card to bid for COE. They would bid a low number so that they would never win the COE, but the funds are charged then repaid. Somehow, this works and well, some folks were able to skim off a lot of rebates from this.
Then there's also folks who use their credit cards to top up their Qoo10 money. You can prepay Qoo10 and load up the Qoo10 account. There were credit cards like OCBC Frank which gave a good rebate for online spending. So when they topped up the Qoo10 account, they got the rebate. Then they would request for withdrawal from Qoo10 to their bank accounts and repeat the process. Another money spinning technique. This loophole should have been already plugged according to the forums.
There's also this card called the FEVO card. Apparently, it's a Mastercard, but you have to top up this card. So essentially, Mastercard processes the transactions, you can use it like any Mastercard, but the account needs to be topped up before it can be used. Well, people also topped up large amounts of cash into their FEVO cards via online transactions, so they got the rebates for making online payments. This top up loophole has also been plugged along with all other top up cards like Ezlink and FlashPay, etc. Basically, the credit card companies just exclude these transactions from any of the rebates they offer.
All this is pretty much called manufactured spending. It's actually a term used in other countries. In Singapore, it's almost impossible to manufacture spending. The loopholes are quickly plugged by the financial institutions.
In other countries, like US, this is pretty possible. But people don't play for rebates, they usually play for miles. I think they don't have as much rebate schemes as we do.
What they usually do, is they use their credit cards to buy gift cards/vouchers.
Using the vouchers, they are allowed to buy cash orders from certain places like Walmart.
So essentially, they "cash out" the funds and deposit the cash orders into their bank and repeat every 1-2 days after the funds clear. I've read of people running $20k to $60k per round of manufactured spending. It's almost a part time job cos some Walmarts have a limit of how much cash orders a customer can buy so they have to run to other hypermarts. Doing this, apparently, they can clock up thousands/millions of miles and fly for free or cheaply on upgraded seats.
Doesn't work here in Singapore, but I'm sure there will be some other loophole which comes about in future due to some oversight. Nonetheless, I'm not saying it's right or wrong. It takes some effort to manage and it also bears some risk that the bank may clawback the rebate IF they find the transactions fraudulent. Some folks will want to do it for free money, some might find it a hassle.
For me, I already have difficulty spending $500 on both my UOB cards, and I've been prepaying my telco bills to push up my spending for the past 2 months. I think if I prepay even more, I'll never be able to bring down the prepayment amount.
To me, I believe I'm part of the system and try to play within the rules. So I use the cards and services as what they are intended to be used for. By taking advantage of it, it may make the banks plug the hole and this may affect other consumers who actually require the services rendered. But someone else is going to do it, so it doesn't matter. It's just not the way I play.
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