The psychology of rewards

[-Cal-]

I also wanted to add that I am a bonus/rewards chaser because I enjoy saving money (as everyone should). I've received over $5k in bonuses/cashback/rewards within the past 12 months. I always take advantage of bonuses on things I would spend my money on anyways but this may not apply to everyone. 

Edit: And kdm jumps on me sometimes in my threads, I don't mind as it is a necessary reminder to some readers who may not fully understand the impact. 

[kdm31091]

Sorry if I misunderstood you. Anyway, really not trying to be negative here, just realistic. I think the topic can provide some good discussion, so I want to keep it going in a good direction.

[redpat]

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

[-Cal-]

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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There is some truth to that. Some look at it as what is out there that I am not taking advantage of. Some go for higher CLIs to pad their utilization. 

[kdm31091]

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@-Cal- wrote:

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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There is some truth to that. Some look at it as what is out there that I am not taking advantage of. Some go for higher CLIs to pad their utilization. 

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I find padding utilization to be an overhyped thing as well. If your utilization is low, it's low. Doesn't matter if you have 50k available or 300k available. If you are paying in full or close to it every month anyway, you don't need some crazy high limits because there's nothing to "pad". If something does come up and you have to carry a balance, oh well...util fixes itself very quickly, so not worth having a bunch of cards just for that reason.

I know not everyone does it but some people seem to apply for cards they otherwise don't want just to "pad util". I find that misguided but that's just me.

[Callandra]

^That could be a whole different thread -- the psychology of CLIs. 

But to answer this thread, yes, I like rewards as much as the next person but I am not going to have 10+ rewards cards to maximize every last cent possible. I just can't be bothered and I like only having a few cards. Plus with something like my Freedom, it takes forever to get enough points to cash out anyway (the 5% categories for the rest of the year just don't work for me). I think it's fine for those with large spend and/or those that want to but as KDM and I always say, if you're not a big spender, you're going to wind up with little amounts of rewards spread out over multiple cards which doesn't make sense. I don't spend much anyway so having more than three rewards cards doesn't make sense. I know some people go for the bonuses or perks (I can understand perks like a free hotel night for having the card). I think a bonus is nice but it's not a deal breaker for me. 

I only got $25 as a bonus for Sallie Mae but it's okay because the card gives me so much back and I cash out every other month. Sure, it wasn't a huge $100+ bonus but in the long term, I'll wind up with way more than if I got a card like Amex's BCE/P or BoA's 3-2-1 Cash rewards where I wouldn't get as many points (I like to shop at Target/Wal-Mart as well for groceries). 

Banks want us to spend more and sometimes rewards/CCs aren't for everybody and I think that's okay. I have a lot of self-discipline so I will never spend money on something I wasn't going to buy anyway. 

[Anonymous]

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@redpat wrote:

It's the sociology of rewards rather than psychology.

Everyone is looking at what everyone else has and wanting MORE and marketing by CCC is making it a social epidemic, lol.

Herd mentallty, just look at the posts of Discover CLI, people got'em even though they didn't need'em.

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@redpat,

I think I'd have to disagree with it is "sociology than psychology". Psychology is #1.  Human beings are hard wired for instant gratification and cash back does just that hence the craze for it.  In this excerpt from the business insider a while back by writer Jim Wang (can't fine the link)...

"Psychology

The fundamental goal of credit card companies when issuing cash back cards is to encourage people to spend more. Indeed, the incentive to “earn” money back does seem to result in people being more willing to use credit cards to make purchases. The problem with this, apart from the obvious fact that you could wind up spending more money than you otherwise would in order to earn money you otherwise could have saved, is that it could mean you won't be able to pay off your balance at the end of the month. The obvious result of this is that any cash back is converted into interest, in which case you earn nothing back.

When considering getting a cash back charge card, it's vital that you possess the cognitive maturity to understand the way in which the issuer expects you to think, in order to preemptively prevent being taken advantage of."

[Anonymous]

Why is anyone defending getting a bunch of store cards? 🐒

[Open123]

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@kdm31091 wrote:

If I created the thread, I have every right to "inject my opinion" into it...if someone doesn't want to read it, that's fine too. We all ignore threads we aren't interested in. As far as giving my opinion as to why a card wouldn't work for me, I'm providing an alternative to the usual "app now app now app now!", which IMO, means I may help someone!

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Of course you do.  

No one is suggestion you shouldn't.  This is America, and this is a public forum, subject to TOS, of course.  On some posts, a person simply wants to know if Card X makes sense for them, which is a pretty natural thing ask on a CC forum.

In my view, I think the person asking would be best served by:

1.  Pros and Cons of the Card in question.

2.  Suggestions, followed by pros and cons and why an alternative *may* be better.

3.  Reasons (opinion) we made the recommendation for potential alternatives.

For instance, if a person posts, "Is the BofA Cash+ a good cash back card?"  Should I (since I'm partial to rewards) begin by, "Oh, cash sucks.  You're getting ripped off.  BofA are losers!  You should start looking at Amex 50K promos and Chase 40K promos."  Though it may or may not be better, ideally, we should naturally progress with pros and cons, and allow for the natural progression of what is most suitable for the OP to evolve with their full participation.  It may be rewards, even if they wanted cash.  Conversely, it may cash, even if they had wanted rewards initially.  Every case is unique, and takes on it's own journey.

Rewards are not a zero-sum game.  We may all collectively benefit.

[myjourney]

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@kdm31091 wrote:

Sorry if I misunderstood you. Anyway, really not trying to be negative here, just realistic. I think the topic can provide some good discussion, so I want to keep it going in a good direction.

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Thanks KDM no harm no foul 

My whole response was a generalization of all threads not just yours