This Week in Your Wallet: August 21, 2012
In the past, I’ve used this space to, shall we say, note my frustration at how difficult it can be to redeem rewards from loyalty programs (particularly frequent flier miles). I’ve even tried to provide tips to help you get around this difficulty. This week, I’m happy to tell you there is a way to redeem your credit card rewards without jumping through hoops while patting your head and rubbing your stomach.
This solution? Let your credit card company make it easy for you.
I know, it sounds crazy, but hear me out. The Wall Street Journal reports that in the face of growing competition, credit card companies are trying to make it very easy for you to actually use the points you’ve accumulated. Discover is letting its customers make direct rewards purchases from Apple, Walt Disney’s Club Penguin and Facebook. JP Morgan Chase cardholders can use their rewards directly onAmazon.com. American Express customers can use points with Amazon.com, Ticketmaster and Telecharge. Citigroup cardholders can access a similar benefit through ticket-seller LiveNation.
However, before you rush to redeem your rewards, make sure you calculate the true value. The Journalnotes that while your Chase card might offer a 1-1 ratio between points and cents when it comes to buying items through Amazon, the point-to-cent value could dip by 20 percent if you want to use those rewards to buy a concert ticket through a different sponsor. (In the example the Journal provided, a $100 Amazon purchase would therefore take 10,000 points, and a $100 concert ticket would take 12,500 points.)
The moral of the story here: things are moving in the right direction when it comes to truly being able to redeem the rewards you’ve earned, but you still have to read the fine print to make sure you’re getting the best deal.
And now, here are the other stories for the week:
More on personalized shopping data
Last week, I told you about how stores are starting to learn your buying behavior and cater deals specifically to you and that behavior. I said that I would continue to provide information on this new trend as it became available, and apparently since I asked, the internet gave. The New York Times ran this in-depth profile of a new trend in e-commerce: tracking your e-score.
What is an e-score, you ask? It’s essentially your buying power — aka, your value as a customer — boiled down to a number. It factors in your age, your income, your property value and your retail history. But unlike the other numbers in your life (SAT scores, credit scores, number of pounds lost from the waistline), you will likely never know your e-score. To the alarm of consumer protection groups, it’s a metric that remains largely invisible to the average consumer. Yet, since your e-score can affect the deals you see on the internet, this invisibility could come to be a big problem for consumers. After all, you may not spend $200 per trip to Rue La La, but does that mean you shouldn’t get the same access to deals as someone who does?
For more information on e-scores, I highly recommend reading the full Times article, linked above. It’s a bit long but well worth the read.
Think small!
… When it comes to debt, that is. In the debate over how to best pay off debt, there are typically two main approaches: the avalanche method, which has you paying off the debt with the highest interest rate first, saving money over time, or the snowball method, which has you tackling the smallest debt firstin order to get the psychological boost of checking it off your list once it’s gone. Now, according to new research, people with large amounts of debt are more likely to pay off the whole amount if they start with the accounts with the smallest balances.
The researchers found that “the fraction of the debt accounts paid off appears to be a better predictor of whether the consumer eliminates his debts than the fraction of the total dollar debt paid off.” Interesting, right?
I’m typically a fan of the avalanche method — it does save you the most money over time — however, I’ve come to the conclusion that depending on what motivates you, sometimes a combination of the two approaches might be best. So if you’re staring at a pile of debt and feel completely overwhelmed, take a look at the smallest account balance first. Once you feel the surge of accomplishment by paying it off, you can focus on the account with the highest interest rate. It’s a win-win!
You get a car, and you get a car…
Have you ever had to bribe your child to get him or her to go to school? (I hope not!) Better yet: has yourschool district ever tried to bribe its children to feel excited about an upcoming school year? A fun newTime Moneyland post took a look at some schools that are doing just that. A school in Dallas is giving out $1,500 worth of prepaid debit cards in a random drawing for all children who attend the first day of school; in Detroit, a local shoe store is giving out free Nikes to everyone who comes to school on October 3, the day there is an official attendance count in order to determine funding. And in the spring, a school in the Dallas area (I’m sensing a trend) gave out free cars to eight students with perfect attendance and a good academic record. Maybe I’m living in the wrong school district…
Have a great week!
Jean
