@kdm31091 wrote:We all know banks design reward programs with one end goal. They want us to spend more money in order to "get more rewards". And unfortunately, it works! We apply for cards we don't need to get that extra 1 or 2%. We chase every penny in rewards.
Lately, as I've reflected on things, I've really come to realize that it often makes very little practical difference and is just one more thing to track and manage. As I said in an earlier thread, an extra 1% on one category is not going to make any huge difference in your rewards unless you are spending a lot of money in that category. Things get even more diluted when one has 10+, 20+ etc cards. While of course some people make a lot of money and therefore spend a lot of money, for those with an "average" spend level the benefit is more psychological than practical.
My point here is that I think as a forum we get a little too "app happy" and encourage others to do the same without really drilling down to the nitty gritty: how much am I actually going to get out of this? It's a HP and AAOA ding for say, 1 or 2% more in rewards. Some things sound great on paper but translate to very little. I know I like to "pick on" the AARP card, but if you have a Double Cash, and you spend $500 a month on dining, you got an extra $5 from AARP over a DC. $5 you wouldn't have otherwise had, yes, but it's spread on a different reward card, etc.
Increasingly I'm finding I prefer to keep it more simple. I think as a whole, we need to slow down on encouraging everyone to chase after rewards. Concentrating your spend will often yield more fruitful results (and since many cards have redemption minimums, you may find it takes a VERY long time to redeem rewards if you are chasing too many!).
I realize this is kind of the same wavelength as my thread last week, but just been reflecting and thinking and would love to hear some thoughts.
Another great post sir! Yes, you're absolutely right. They are developing these programs not to benefit us more as a consumer, but for them. They hope we spend more and carry a larger balance only to pay them more in interest. Interest will always outweight the benefits in rewards. So they win, and we lose. The trick, as you pointed out, is to spend what you'd usually spend and enjoy the rewards from there. Don't chase rewards to get more back. If you go out and spend $100 on something you didn't need in order to get 5% back... you're negative $95 dollars now. Plus, if you carry that balance for one month at a 22.9% APR (typical APR with average credit) you owe 1.9% of that transaction, which outweighs my Quicksilver. So they won, and that's only at one month. They really start kicking ass and making money for the months onward.
I'm guilty of it, even as of today. When I read the Discover/Apple Pay thread I was thinking of how I can maximize the cashback. That involved me going out of my way to get the spend and I thought, "Why go out of my way to spend more than I normally would" then I'm wasting money on stuff I don't need. So I plotted the places that do accept Apple Pay that I normally use and will continue normal spending. So I may not reap huge rewards from this promotion they are doing, but I certainly won't be spending more than I normally would either. Luckily, a lot of the places I use do take Apple Pay.
Like I said in your other post too. I just got my 6th card and already miss just having to manage only 2 cards. I did it from a standpoint of helping for 2017 when I want to get the 3 cards I really want, then I'll close and consolidate from there. I honestly don't spend enough to utilize 6 cards for any kind of decent rewards. I couldn't imagine more than what I have now. But my spending is completely different from many others. I'm very frugal and don't do a lot of "pleasure" spending. In fact I rarely go over 2% of my old available credit ($13.5K) and the overwhelming majority of that 2% are needs. Now that I tripled my available credit in the last couple of weeks I doubt if I'll every go over 1%.
But, that's for me. If someone wants 20 different cards and spends $20,000 a month on them, then good for them. They will get very good rewards for their level of spending. I think the whole point of KDM's post is to live within your means and don't get caught up in the game, because you'll lose everytime.
Personal:
@DrZoidberg wrote:
@Anonymous wrote:
@DrZoidberg wrote:This site is a kind of a joke. People celebrate $500 credit lines like they just won the lottery. It's not healthy how obsessed peopl have become and excited they get by obtaining a new debt tool. What's worse is the people who just filed for bankruptcy start posting months later all the new credit cards they just got.
This site has good advice and information, but majority of this stie needs to stay out of the credit card and approval section .
Until you have been there, you will have a hard time understanding why someone will celebrate getting a $500 card after bankruptcy (NOTE: I have never filed BK). But when you have gone through something hellish like that, a $500 approval is a sign of success and a start over hence the celebration.
Most of the approvals I am talking about are not post BK. Most are people who have 25+ INQ, 30 store cards and 600 scores who just keep getting more usless store cards.
That is just because they don't know any better and think all cards are equal. Gah I hate store cards soo much.
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To go along with my other post... rewards only work if you PIF. If you don't, you're losing (of course unless you have a 0% period)
@Broke_Triathlete wrote:To go along with my other post... rewards only work if you PIF. If you don't, you're losing (of course unless you have a 0% period)
+1 Yes. Just yes. If you can't PIF and its not 0% APR then trying to earn rewards is a massive mistake.
@Anonymous wrote:
@Broke_Triathlete wrote:To go along with my other post... rewards only work if you PIF. If you don't, you're losing (of course unless you have a 0% period)
And understand how THAT lender deals with purchases in your 0% and you know what you have to pay to avoid or minimize interest on new purchases if you don't have 0% on new purchases.
Correct. I didn't clarify that because I assume people know to pay off those purchases so they don't get hit with backdated interest.
@Open123 wrote:Good post!
Not strange, at all. Many who read my posts may think I'm "App happy," but nothing could be further from the truth.
For instance, unless a compelling reason exists (ie., 3% Miles, Fid Amex for Serve, IT 10% Promo, JCB 3%), my minimum requirements for an HP would be, at the very least, the following: (1) new TL, I'll never accept an HP for CLIs, ever; (2) at least $400 - $500 in cash equivalent value; and, (3) have some kind of feature, benefit, or accelerated spending I find useful. If those conditions aren't met, I won't app. Matter of fact, if those conditions are never met again, I will never app again. Even now, the $400 bonus on WFC's Propel doesn't meet my requirements (benefit and deposit account hassle), I won't app, even for the $400.
However, if those conditions are met, I'll keep app'ing. One of the lessons I've learned in life, "when you see it, bet big." Scared money never wins, ever.
+1 These are basically my criteria as well. Every card I have ever applied for I had a specific need/use for that card or the associated bonus. I will never take a HP for a credit line increase. There have been times when an outstanding offer has come around and I stayed in the garden, because I did not want to weaken my credit profile too much.