March 13, 2009
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News: The Ambiguity of Credit Card Rewards Points.
Only a savvy few understand the credit card rewards points game. Of course it's designed that way. After all, it's 99% market-based, meaning that you'll be lucky to come out with a penny on the dollar of the perception that attracted you to it. Great marketing and fairly harmless. But there's much to be gained by learning the credit card rewards game. Most successful people learn the game by ‘dumb luck' as I did. We simply fall into a good situation mixed in with many losing situations and take notice only after the rewards show up. Then we see how much difference it can make by choosing the better credit card rewards plans.
Case in point…I fell into a ‘lucky' situation a few years back with a B of A credit card where every quarter, the bank kept putting actual dollars into my account. I didn't even have to ask for it. I naturally assumed this was typical and expected it from my other credit cards. This past Christmas season I was a little cash-dry and thought it a good idea to redeem some of the $10,000 worth of rewards points toward Christmas gifts. The biggest cache I had was with CitiBank's $1,000 in ‘Extra Cash' rewards points. In this case, I combed and combed for hours trying to find even one thing from the choices remotely useful as a gift. With the hundreds of selections, I could find nothing I could use, even though I wanted to spend.
You can only redeem ‘Extra Cash' by buying things that cost ten times the amount of the reward so, to redeem my whole $1000 in rewards, I would have to spend $10,000 on my credit card. All items were priced retail with no other discount. Even at the malls one could get better prices even after redeeming the rewards points. Total waste of time and hope. Bottom line is: Unless you just like to brag about how much you spend on something, go for the actual cash. It has no ‘perceeived value'. It is what it is.