Saturday, March 29, 2014

Rewards Programs

A rewards program can be a good way to save money.  You can even think of it as making a bit of extra money.
I'm enrolled in the rewards program of a certain bank.  Spending at certain establishments earns me points at the rate of 1 point for every P400 spent.  I can then spend those points with 1 point being equivalent to P1.
Now, getting P1 back for every P400 spent doesn't save siginificant amounts, but every little bit counts.  Also, there are other ways I earn points.  The bank awards a certain number of points monthly, depending on the account balance.  For money (such as emergency funds) that needs to be put in low-risk vehicles a savings account with a rewards program might be a good choice.
Another way I earn points is through bill payments.  I find this is a particularly nice way to earn points since
  1. I'm going to pay the bills anyway, points or no points.
  2. Points are awarded at a higher rate than for other payments.
You might be wondering if the rewards program is worth it.  In my case, it is.  Having the rewards card hasn't really changed my buying patterns: I buy the same stuff as I would without it.  So what's changed?  Well, now, because I can buy stuff with points, I essentially get stuff for free.  In the past couple of years most of the light bulb replacements (3 or 4 LED-types) I've bought have been paid for with points.  Not awesome but pretty satisfying.
There are of course, things to look out for when participating in a rewards program.  These will make the difference between saving/earning and losing money on the program.
  1. Check the fees.  If fees eat up most (or more!) of the points rebates, that's a losing proposition.
  2. Check prices in participating establishments.  Switching stores just to earn points doesn't make sense if the new store has higher prices.  Same argument for switching to a store that isn't conveniently located.
  3. Don't fall into the trap of spending more just to get points.
Hope this helps.

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