So today during my time on the show AM/BC I decided to talk about getting rewards and bonuses from using a credit card and how some people actually go out of their way to make purchases to build up reward points where I think it makes no financial sense. For example, someone may be like 200 points away from buying a plane ticket and without really thinking about it they just start spending. And since people are in the vacation planning mood usually around now it cringes me whenever I hear people say they need to buy something just to earn enough points to get an item.
So as an example I first used this fifty dollar gift-card that I saw on a rewards site as this way we can puts static dollar value as to how much a rewards point is worth in this case. As you can see, for this it mentions that this $50 gift-card is worth 475 points.
As well, since during this time people usually want to do some traveling I did try to find airline ticket offers too. This company used the airline Westjet and here you can see a list of destinations and as well the cost of it. For example purposes I just used the Vancouver to Toronto cost which is 2187 points.
In order to put an actual dollar value to it, I went to the Westjet site directly and did a quick search on how much a ticket would cost between these two destinations. As you can see, the price is about $282.
With that I started to break down the numbers with actual credit card reward details here such as how much points you earn per dollar and as well annual fees that may be attached to it if you want to earn points faster. These were the numbers:
|Rewards Card at 1/$20||Rewards Card at 1/$15|
|$50 Giftcard at 475 points||$9500||$7125|
|Airfare at 2187 Points($282 Value)||$43,740||$32,805|
In general, I think most people would agree where if you are going out of your way to spend like $9500 just to get a $50 reward it simply doesn’t make sense. Same thing with the airline ticket. On top of that, you have to factor in the annual fee to see what the real number is.
Speaking for myself, I usually prefer the cash back cards and so with the same example I used a 1% and 2% cash back rate that people can commonly find here. Based on these reward values the numbers looked like this:
|Cash Back Card at 1%||Cash Back Card at 2%|
|$50 Giftcard at 475 points||$5000||$2500|
|Airfare at 2187 Points($282 Value)||$28,200||$14,100|
While like in this example you would be spending less to achieve essentially the same dollar value, I think the bottom line again is that if you are going out of your way to spend more just to earn the bonus/reward it can actually cost you more. I think this is one of those times too where you have to sit and actually see the numbers for it to click so that you don’t just emotionally buy into a rewards or bonus program.
Finally, on the show I was saying how like in these examples sometimes just doing some old fashion coupon and promotional code hunting can probably save you more. Like in this example, with a little bit of research I was able to drop the price of this ticket by like 20% just by finding a discount code. So instead of like $282 I was able to quickly drop the price to about $225 as you can see here:
As well, I’m sure everyone is aware that when it comes to plane tickets that different days can be cheaper. In this example, just changing the flight to like a day after and using the coupon I was able to drop the price to like $209.
I personally think like here if you are going to go out of your way to save some money then spending the time and energy to find discounts probably makes more sense than spending extra money that you wouldn’t have otherwise. One site that I mentioned which I even use to help you get started is http://www.retailmenot.com/ There, you can find a lot of discount and coupon codes for a lot of different businesses. Feel free to share your sites too if you know of any other good ones.
It’s very easy with the Internet to find these deals too I say. Bottom line, treat rewards and bonuses for what it is. Basically, a bonus for what you normally do anyways.