I have a Mastercard rewards card where I get 2% cash back on everything. It used to be 5%! They decided that was too good a deal for me and cut it back.
Anyway, I can go online and redeem my points. I can simply credit my account which is very convenient or I can choose from a dozen or so “gift cards” from national retailers.
The question I have is why would someone choose the gift card which has less value because it could be lost, I have to carry an extra card around and remember to use it all up at a given establishment? Why not instead simply credit your credit card and not have to give it any more thought. Why would ANYONE choose the gift card?
It is well known that a highly profitable percentage of the value of gift cards is never used. Its 5-15%.
No. They cost you $50. If you want to give someone money, why not just give them the cash? Why involve some huge corporation which is effectively selling 90 cents or so worth of scrip for a buck.
The US consumer is the dumbest person on the planet. I’d bet people in “less advanced” countries would not believe this.
How do gift cards that you buy from your cashback bonuses cost you money? I currently have nearly $200 in cashback bonuses on my Discover account, none of which is out of my own pocket. In fact, they’re actually worth more than that because I can buy (IIRC) a $25 gift card for Borders with $20 in cashback bonus points.
I was going to say the same thing - Discover offers you the opportunity to get gift cards from “partners” and they will then give you more value than your actual rewards balance. So in that case, it is in your best interest to get the gift card rather than the balance credit.
In the same way it woudl cost you money if your boss deducted it from your paycheck. You have earned that reward, it is your money under the contract. Therefore, it costs you money to “redeem” that award as a gift card.
I don’t see the analogy; the cashback I earned didn’t come out of my pocket in any way, so whether I apply it to my balance or take it in the form of a gift card doesn’t affect how much benefit I get from it. In fact, as I stated in my post, it’s actually more advantageous for me to take it in the form of a gift card that is worth more than the amount of cashback money I “redeemed” to get it.
This is the case for me. It’s something like for 1000 points, I can choose between a $50 gift card or a $25 credit to my account. If I can find a gift card for someplace I’d go anyway, the gift card is twice as valuable. That more than makes up for any inconvenience of carrying around a gift card.
The cash you earn from work doesn’t come out of your pocket, either…you do something, and they pay you. If they pay you a bonus at the end of the year, do you consider that money that you didn’t earn?
If you take it in the form of a gift card and use it at someplace you were planning on spending $x anyhow, then yes, it’s the wiser financial move. But it in no way diminishes the fact that this is earned money and should be treated like you earned it, because you did.
I always take “eGift certificates” from Amazon. They email you the code in 5 minutes, then I type it into Amazon.com. Then I can’t ever forget the card unless I decide to never use Amazon again.
Well, sure, that makes sense, assuming you want to spend some money at Borders anyway. But the situation I was describing was not the same. I could choose from a gift card or a credit of the same amount.