I don’t use credit cards a lot, and haven’t had much experience with rewards cards. But when Mr. A opened his business checking accounts in April 2009, he applied for and was given a rewards credit card. As a “reward” for opening the account he was awarded with an initial 2500 points. We were content to let the points sit there and build and in the 22 months he’s built up a lot of points.
50,091 to be exact.
I’ve visited the Rewards Center a couple of times, just to see what kinds of things are available. I saw that he could buy gift cards from Home Depot, Best Buy, Target, Outback Restaurant, Borders, and others, or he could buy all kinds of things like jewelry, alarm clocks, video games, televisions, vacation packages and more. I was curious to see just what kind of point value he would be looking at and decided to check out two items.
The first thing I looked at was a Fujifilm FinePix JZ300 12 MP Digital Camera with 10x Wide Angle Optical Zoom and 2.7-Inch LCD (Silver). Buying through the credit card rewards program it would cost 21,600 points. A quick visit to Amazon and I find this specific model can be had for $119.95. So the point value on this purchase would be $0.0055.
A Homedics Bath Scale with Body Composition Scanner would cost 10,300 points, retailing at Amazon for $59.99. Point value would be $0.0058.
I thought the purchase of a gift card to Home Depot might be the best use of the money, as he could turn around and use it for business purchases so I decided to calculate the point value of the various gift cards.
- $25 gift cards cost 5000 points. Essentially the point value at this level is $0.0050 or half of one cent.
- $50 gift cards cost 7500 points, with point value of $0.0066.
- $100 gift cards cost 12500 points, with point value of $0.0080.
- $200 gift cards cost 25000 points, with point value of $0.0080.
- You can even get a $500 VISA Rewards Card to use anywhere, which will cost 50000 points, with a point value of $0.0083.
Next I compared the purchase of the gift cards versus taking the cash back reward. Of course the larger the amount of the gift card, the less points it costs per dollar, but the best deal was hands down the cash back reward. For the cash back reward, the point value is $0.01.
Considering the cash back value of the points is one penny, looking back to two items I checked on Amazon I found that the camera would have cost an equivalent of $216.00. The bath scale’s equivalent would have cost $103.00. This convinced me that buying from the Rewards Store is probably always a bad idea.
The really interesting thing is if we bought something, ordered a gift card, or the VISA rewards card, it would have been shipped and in our hands in less than a week. However, since we chose to go with the cash back option, it takes 8-10 weeks to process. And it isn’t actually “cash back” it will be applied to the credit card balance.
That’s okay. Mr. A is having a bit of difficult with cash flow with his businesses right now so every dollar helps, and this $500 will be a big help even if it is going to take two to two and a half months to see that money back in the account.
Do you use rewards cards? Have you ever bought from their Rewards Center? Or do you always take the cash back?