The word loop is one of those many words in the churning and MS world that can mean a lot of different things depending on who you ask, kind of similar to how the whole hobby doesn’t have a universally accepted name. 

In a lot of places, it’s simply used as a synonym for play, which is kind of right, but also not. Play itself is fairly ambiguous and is essentially a single unit of MS, whatever that is. And while all loops are plays, not all plays are loops. 

A loop implies that you’re moving or converting assets from one account or form to another (and possibly even more in the middle) before it eventually ends up right back where it started. 

A common one that all of us are familiar with and doesn’t require cryptic reference is the ‘ol stand-by of street MS. You go out to a gas station, office supply store or similar and buy gift cards with a card that earns in that bonus category. From there, you liquidate those gift cards back into money in your account, that you use to pay off the credit card. Once the card is paid, the loop is complete.

While the bonus category is important, the true measurement of your earnings is how fast and how inexpensively you can get that money back into your account and ready to pay off the card, reset the credit limit, and start the loop again. 

If you can get the funds back in your account a day or two later with something around a 1% fee, you’re doing quite well. If the cards sit in your closet waiting to be used to prepay the next six months of utilities, it’s not as exciting. Earning high bonus categories on things like electricity or your mortgage is cool, but isn’t life changing in the same way that high volume is.

Speed is everything when you’re running loops, and optimizing your ability to move money while staying within the limits of your targets and settlement times is key to big profits. To hear it in a much more succinct and clear way, some of the best MS writing out there is MEAB’s velocity of money series.

Of course, there’s plenty of other loops out there, and not all of them even involve talking to a real person in real life. A true closed circuit loop is ideal, where you can move from funding account to target back to funding account seamlessly. Some do exist, but there is generally some level of asset conversion that occurs that entails slowing down, high cost, regulatory red tape, or some combination of all three. 

True closed circuit loops are few and far between these days, and moving money in and out from the same account isn’t exactly the smartest way to avoid an unfun conversation with a compliance offer. 

A loop being more complicated doesn’t necessarily mean it’s a bad thing, and sometimes adding additional segments to this MS roller coaster means increased earnings. Case in point – you have two targets that don’t accept loading in the same way, but there is an intermediary step that helps you earn some extra on the way back into your account, while avoiding the in & and out from the same account that makes you look suspicious. 

There are loops everywhere in this hobby, and it’s not necessarily just the individual loops that you’re running yourself. The loop that is working well for a whole lot of people in the rewards arbitrage space right now is just moving assets in a circle as the various middlemen arb a cut from it, before it ends up essentially right where it started a week later.

In a vacuum, it all sounds rather silly, and it is. But these arbitrage opportunities are real, and grabbing your bit of edge in the equation is the key to being a MS advantage player. 

Generally, closing the loop faster involves things that are somewhat inconvenient. Checking platforms daily, significant obfuscation of how much cash you are actually working with, and spending way too much time at the Fedex store are all annoying to deal with. But definitely not as annoying as earning ⅓ as much as you could be on the same loops because you can’t ride them over and over again. 

There’s one final thought on loops to share. Just because you can run a loop doesn’t mean you should. Rare loops that can be run at very high volume at very high speed at extremely low margin aren’t quite as intriguing when you factor in the risk of the target going scorched earth.

Pictured: MSers with a big appetite for risk who had set the launch velocity too high on their shuttle loop without checking the length of the spike element

Good luck on the ride this week, friends.

Napaykuna!