Tuesday, October 14, 2014

Reward Points

While I'm a pro at using the free loyalty cards many stores provide, I am just beginning to learn more about all the rewards points and options out there for various credit cards. Credit card reward points are great because they feel like free money -- and if one is using a credit card anyway, why not get something back for it? As long as it doesn't encourage more spending on the card, and the card isn't costing a high interest rate, it's a nice little bonus.

I want to know more because it's important to know the options -- if used to their best advantage, they can really help cut down on things like air travel for vacations. Even so, it certainly is a lot of work to figure out which credit cards are the ones to open for which rewards, while also weighing the importance of not having too many credit cards and the interest rates or annual fees each card will require, against the types of purchases that will incur the highest number of points.

In the meantime, the credit card I've had for years has been racking up points. It is a pretty simple point system with most purchases working as one point for one dollar, but because I haven't touched the points for a while, they started to accumulate. There are lots and lots of options for redeeming them, from using them to pay bills, to donating to charity, to purchasing train or plane tickets, to getting cash, to trading for items of all kinds from kitchen appliances to jewelry.

After looking around at the different options, it becomes clear that some options have a higher return per point. Thanks to the various prices available for hotel rooms and flights, it's tough to figure out if they are the best deal, but simple things like paying bills, getting gift cards, and buying electronics are easier to figure out the breakdown. Here's how a few options break down for my card...

-Apple iPod Nano, 16gb, 7th Generation lists at about $152.00 at the store (including the average sales tax). Through my rewards, it costs 18,400 points, which means that the rate for this item is about $1.00 = 120 points.
-A $100 gift card to a restaurant or store is 10,000 points, or $1.00 = 100 points.
-Paying bills breaks down to about $1.00 = 154 point.

Honestly, the numbers are close enough that I may not have noticed if my wife hadn't done the math and pointed it out to me. But now that I know, using my points for gift cards is the only way I redeem them. It might be nearly free money, but it's still worth making the most of it.

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