Friday, April 07, 2006

Money Saver - rewards programs

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NYC Money just posted a wonderful question on her blog about reward programs.

  1. There are far too many loyalty programs out there
  2. They are seldom easy to use and not really designed to encourage you to use them
  3. It's far too easy to dilute your loyalty "earnings" across too many programs, therefore, never having enough to get anything.

My approach has been to consolidate all of my earnings into a single card (two really - one for personal use and one for business). Once I buit up enough for two international tickets to Europe. Was a great trip. Allowed us to spend more of our vacation budget on high-end hotels.
I'm actually thinking about changing this again.

With ticket prices fluctuating so dramatically, I think I'd do better with a cash reward card. In particular, I'm considering the emigrant rewards card. I think it contributes about 1.4%.

The old formula used to be that rewards points were worth about $0.02 each.
These days they seem to be worth $0.01 each - especially with airline loyalty programs.

Some hotel programs are actually paying 10 points per dollar, but convert down to be worth closer to $0.001 each.

There is another class of rewards program that is much less intrusive and quite helpful. These are the transaction processing programs, such as:

  • upromise - contributes to 529 college savings plans
  • iDine - rebates a % of hotel and restaurant spending

Upromise is a very nice partner program that contributes a varying % of your spending to a college savings account. They also have a solidly performing 529 investment program. My favorite upromise partners are expedia (1% contribution) and walmart (4% contribution) - online only. Many supermarkets also participate. It's important to make sure, when you're shopping, that the upromise product isn't priced more than a similar non-upromise product -- otherwise you're not really saving anything.

iDine / Rewards network is great if you tend to entertain or travel for business or eat out a lot.

What's beautiful about the above programs is that they're invisible. They process your transactions and automatically deposit or rebate your money. You don't have to do anything (except send someone to college in the case of upromise).

Have a wonderful Friday,


1 comment:

Anonymous said...

Great idea -- I personally do the Chase 5% rewards card and the Little Grad ( college savings program. LG lets you saving into any savings account (529 or otherwise) and you don't have to shop through their site... way convenient! -- JO