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| Thursday, November 17, 2005 |
| How reward programs have been good to me |
I have been a fan of reward programs for some time. I have two credit cards which I pay off every month. One accumulates airline miles while the other is an American Express which accumulates reward points for various items. I am also a member of numerous airline and hotel reward networks.
Below are some examples of what I have cashed rewards in for:
American Express
$100 Crate & Barrel Gift Card
$100 Home Depot Gift Card
$500 Home Depot Gift Card
3 piece luggage set
Movie Tickets
Airline
2 round trip tickets to Europe
1 round trip domestic ticket
Marriott Rewards
3 night stay in Paris hotel
5 night stay in San Francisco
I was really good about accumulating the American Rewards points until I purchased my house. Once I moved in and realized I could use points for Home Depot gift cards I quickly depleted that account. I am working on building the points back up again so I can treat myself to something special.
I know that I should probably shift from an Airline Reward card to a cash back card. Airline tickets are so much cheaper now than they used to be, so the points are not quite as meaningful. I love my American Express card and enjoy the reward items. Lately I have been going for the gift cards since they seem more useful to me than the actual gift items available in the program.
With a cash reward I would feel obliged to save it. These rewards in a way force me to treat myself (or as much treating as can be done at a Home Depot). |
| posted by Boston Gal @ 9:11 AM *
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| 7 Comments: |
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I used to get the Banana Republic cards with my AMEX Rewards, but like you, once I bought my home I started getting the Home Depot gift cards instead.
SMB
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I make a point of paying all chargeable items with my Citibank Dividend Platinum Select MasterCard, which isn't a problem since I pay it off at the end of the month. I went as far as putting a large portion of the cost on a new car on this card, which the financial person didn't want to do but since the sales person said it would be okay, we held him to it. This helped to reach the $300/year limit. Unfortunately, I reached that limit with another two months before the limit is reset.
It is great to get free month for something I would have been purchasing anyhow.
Neo
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Your focus with these rewards program should always be on the return you're getting on each dollar spent.
With most airline programs, you're likely spending $20,000 to get 20,000 points ... and then redeeming them for a $200 (or less) ticket. Your return is thus one cent per dollar spent.
The good cashback programs will often net out at 1 1/2 cents per dollar spent and can sometimes reach close to 2.
Check out Fidelity's card that kicks in 2 cents per dollar to your child's 529 college plan ... perhaps one of the richest offers out there today.
How many points are you using to get your Home Depot certificate? What's your return per dollar spent?
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Aren't there fees with the Amex card/reward programs?
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You have doomed me with this new information. Now I need to get these Home Depot gift certificates (lord knows I can spend them fast enough) instead of little trinkets for myself which I don't actually need.
To answer anonymous' question, you redeem 100 points for $1 worth of merchandise. Typically you get 1 point per dollar spent, but gas and groceries are 3 points per dollar spent. Since I spend a fair amount on gas and groceries per month, it hovers somewhere around 1.7% "cash back" equivalent if I get the HD rewards.
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In answer to 2Million's question - yes, in order to accumulate reward points in the AmEx reward program you pay a $40 yearly fee.
Since I charge "expensable" items on my AmEx card for work the $40 fee is well worth it for me.
If you don't think you will generate more than 4,000 points in a year then the fee is not worth it.
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Threatening to cancel at renewal time is a good way to get the fee waived. Even if it takes 30 minutes on the phone you are still "making" $80/hr for your effort.
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I used to get the Banana Republic cards with my AMEX Rewards, but like you, once I bought my home I started getting the Home Depot gift cards instead.
SMB