I love credit card rewards.
Getting paid to buy something I was already going to buy. Are you serious!? Holy macaroni I love me some credit card rewards!!!
Here’s the problem: I can’t stop earning rewards, and it’s starting to cost me money.
I recently received $100 and $50 Visa gift cards after signing up for AT&T U-Verse (why they couldn’t send me one card worth $150 is completely beyond my comprehension). The cards expire in less than three months, so I have to use them fairly quickly before they are worth nothing. The only problem is I don’t know what to buy!
Tag told me to just use them when I buy regular everyday stuff, which sounds like a great idea. The only problem is I get 2-5% cash back when I use my credit cards, and I would get 0% back when using these gift cards. I literally don’t want to use free money because I want to spend real money and get a few pennies back in rewards.
Here’s my current rewards CC lineup:
Citi Forward: 5% back on restaurants and entertainment
PenFed Gas Card: 5% back on gas
Citi Thank You Premier: 2% back on everything thanks to built up rewards on plane tickets
I feel like I can’t use these gift cards on restaurants, entertainment or gas because I’d be missing out on 5% back. Even when it comes to groceries (pretty much the only other thing I buy), I would still missing out on the 2% cash back and feel like I’m cheating myself out of rewards.
The other thing I hate about these gift cards is that I don’t want to keep track of how much is left on each one. Forget spending $4.87 on lunch and then trying to remember I have $95.13 left. I would much rather spend all $100 or all $50 at one time so I can just throw the card away after a single purchase.
I know it’s stupid. I feel like I have a disease. Is there such thing as Personal Finance Obsessive Compulsive Disorder?
What Should I Do With These Cards?
As a self proclaimed technology junkie, I really want an android tablet. For some reason, I’ve justified a tablet as a good way to spend the cards because a) I can use the entire card in one purchase, and b) electronics do not earn 5% on any of my credit cards (although I would still be missing out on the 2%).
In fact, I was about to buy the Acer Iconia A500 today because they have a sale where you get a $100 gift card rebate at Best Buy. The problem is, I went to Best Buy to test it and I liked the Asus Transformer much better, and it wasn’t on sale. Stupid Acer. Why isn’t your tablet better?
Luckily after window shopping, I actually came to my senses and realized that prices for Android Tablets will most likely continue to come down (because sales aren’t particularly strong) and I can get a nice one for even cheaper than $300 in a few months (especially if I wait for Black Friday). Plus, Amazon is supposed to come out with an Android Tablet, and I love Amazon, so I feel like I have to wait for that one.
Restraint, Kevin. You don’t need a new toy. At least not today.
Actually, I’m glad I didn’t use the gift cards there because tonight I actually realized what I need to do with the cards: buy groceries with them.
If I’m willing to fore-go the 2% benefit on an electronics purchase, then why wouldn’t I be willing to do the same for a groceries purchase? Because I was being an idiot, that’s why. As long as I’m not missing out on a 5% category, then it makes sense to use the cards enjoy some free groceries. Plus it will make my “Food” budget look really nice next month!
I’m curious if I’m the only one with this horrible disease where I don’t want to spend free money. Let me know in the comments if you have the same problem.
Kevin McKee is an entrepreneur, IT guru, and personal finance leader. In addition to his writing, Kevin is the head of IT at Buildingstars, Co-Founder of Padmission, and organizer of Laravel STL. He is also the creator of www.contributetoopensource.com. When he’s not working, Kevin enjoys podcasting about movies and spending time with his wife and four children.
What about investing the $150 out of pocket, and using the cash card instead of the credit card? oooh oooh better idea: give them to someone that you know who is struggling and needs the money. If you itemize, it may even be worth giving to a 501c3 and get your tax rate as a return…
And to answer your question, sorry, I don’t have this same obsession. I am more of a cash guy.
Investing sounds like a good idea, but if I invest, I need to make sure I get better than the 5% I could get in restaurant and entertainment spending. With the market like it is, I’m pretty sure I’m more comfortable with the cash back.
One way you could think about it is that by using a 5% rewards card rather than the free money, you’re actually spending 95% of the purchase price on something rather than getting it for free. What you’re describing is really common, I know I’ve gotten caught in it before as well. You have to remember that even if you’re getting a pittance back as a “reward”, you’re still spending money. You’ll be closer to catching the Hoff if you spend the free money rather than chase the rewards.
I’m glad to hear you decided to spend it on groceries.
We agree on the groceries! Good.
The tricky part with the other stuff is that I’m spending money on things I would spend money on anyway. It’s not like I’m going out of my way to get the rewards. The only money I spend every month is pretty much on restaurants, entertainment (golf is included in that), gas, and groceries. Groceries are the only thing I’m not getting 5% on.
We can agree on some things, even if we don’t see eye to eye on others. I thought the groceries was a good call. Even if you would have gotten 5% on the groceries otherwise, using the free money on them was still a better call.
I’m not sure what the rules regarding prepaid cards are down there, but is it possible to take the money off the card using a cash advance at a bank machine, then apply it to your rewards card? Win-win?
Kevin, you should check out Swag Bucks…you can “win” things without having to keep track of discounts or where you can use your cards…I think you are flirting with ocd on the reward thing, but it is a far better problem to have than drinking!
I’ve looked at swag bucks, but it never really appealed to me. I don’t want to change my search engine. 🙂 It’s a great idea for some people though.
When I get gift cards that can be used anywhere I pay my cell phone bill. I get 5% cash back at the grocery store, and wouldn’t get but 1.25% back from Verizon.
I would pay any bills you have that can be paid with a card. You still are paying for something you would be paying anyway, and most likely wouldn’t get as much cash back or points as you would in a grocery store. Maximize your rewards.
Another good idea, but I have that setup for autopay, and it would be a hassle to cancel autopay and make a few manual payments. Plus I would forget anyway.
I’m 2% on anything not 5%, so phone is the same as groceries.
I have had the same issue — but I gave up and spent the gift cards. It’s free money. I do try to use them at places where I don’t receive cash back on my credit cards. For instance, clothing stores. I buy a discounted gift card online to Macy’s using the AT&T gift card, for instance. Then I’m saving 10% or so by using the gift card. Or as @melissa pointed out, you can pay some bills with them, such as a gym membership.
Clothing. I think I give myself a $150 annual clothing budget, and I spend most of it on socks and underwear. 🙂
Dude, you’re literally talking about the loss of the opportunity to earn between $3 and $7 on purchases. Just use them! Buy something you wouldn’t have bought otherwise, and then it’ll be a wash.
Because it’ll suck a lot more to have lost $150 because you couldn’t make up your mind.
Oh I’ll definitely spend them. Worst case scenario, I buy Amazon or Best Buy gift cards with them and extend my redemption period.
Sounds like you earned a new toy with all these rewards you built up. I say that you go for it and get the one you want. No one ever get rich on reward credit card programs or skymiles so use up the rewards and do something nice for yourself. It appears to me that you have your finances in order and this is not going to throw you off your financial plan… Neo, http://www.networthprotect.com
Oh, I’m getting a tablet, rewards or no rewards. Eventually. I just have to wait for the Amazon tablet and it’s killing me. If the transformer goes on sale before that one comes out, I might jump the gun and get the transformer
i used mine to pay my AT&T u-verse bills for the first few months and subtracted it from the overall amount i spent on cable that year. i love my rewards too… but it was nice not to have a cable bill for a little while…
Good plan. I just don’t want to mess with my autopayments
ah, yes. i hadn’t set up autopayments yet when i did it. i could definitely see not wanting to mess that up.
I do play the angles when I need frequent flier miles for a trip, but I am much more in control of myself. My brother in law signs up for airline cards and takes the miles. Six months later, he cancels the cards.
I’m doing that with the British Airways card. That was too good a deal to pass up!
Go ahead and get something fun with the card. You can’t be frugal all the time. 🙂
I got a $100 gift certificate and will probably use it on clothes or kitchenware.
I wish I needed clothes or kitchenware, but I don’t need any of that stuff. I should, however, use these to buy a maid. That would be money well spent!
You would have to spend $7500 in groceries or some other 2% back item just to earn back the $150 that you wouldn’t spend. That’s freaking nuts. Spend the gift cards for goodness sakes.
I will definitely spend them. I’m not going to let them expire. The question is… on what.
Haha… quite amusing. I switched a little while back to a dividend card. It pays me cash once a year based on a percentage of what I spend. While I enjoy the dividend, I can’t say I’ve felt the same compulsion as you to spend money using the card! Perhaps counselling?
I’m thinking shock therapy
I also have this problem, which usually manifests in the following way:
“Oh (dear friend), I’ll pick up the tab at this fine restaurant, and you pay me back …”
Of course, I never get paid back. Or they do pay me back, but they owe me, say, $43 and they give me $40, and I don’t want to bring up the other $3 because it makes me look like a cheapskate, so I end up losing more than the reward.
Anyway, I like the groceries idea, but if you’re hunting for something else to buy, I recommend considering the Kindle. I just got one and I’m deeply, madly in love with it.
Failing that, you can always use the $150 to register another blog, maybe on a niche topic like rottweilers wearing socks 🙂 tHaha, just kidding!!
Already have the Kindle. Love it (when I actually have time to read anything). I haven’t unpacked it from my last vacation.
You could use it to stock up on Christmas presents now, so your bank account won’t ever see the large hit for Christmas spending… Since we’re just playing mental games with this money :).
I know it’s a pain, but I would go ahead and keep a little note with the cards on how much you have left. If you buy only $50 of groceries at a time, it shouldn’t be too much of a hassle, but you will have to use them 3 times.
I know on the latest “rebate” card I got, if you have $2.54 left, it won’t let you buy something for $3 and split the charges. (I tried at starbucks since they have no problem doing that with their own giftcards.) So you have to find something for exactly $2.54, or else leave a few cents on it. I feel like they’re definitely cheating there.
Am I seriously the only one who thinks this is nuts? You would rather spend your own $15 to get $.75 back than get $15 worth of stuff (or in your case, $14.25) absolutely free? You may be losing out on your 5% reward, but you don’t seem to be willing to SPEND the 5% reward anyway, so what good is it? I thought the whole point was to get these cash-back rewards. I’ve seen the same kind of rationalization when people say they don’t want to pay off their house because they get a tax deduction. So they’re willing to pay $300 in interest to get a $84 deduction on their tax returns. I have lots of cash-back reward cards, but I find that I spend more when I use credit cards, so I stick with cash. Of course, I’m not as disciplined as you are!!
No, Tonya, you’re not the only one. I was WAITING for someone to bring up the points you did. My goodness. How nuts. No wonder the credit card companies are in control of Washington.
I am well aware it was a nutty way to think, but at least I decided to buy groceries with the cards. I think it was a long screwy road to the right decision. 🙂
And I definitely spend less with credit cards because I track every transaction in my budget. When it’s a cash transaction, I don’t track it and feel like I can spend outside of my financial plan. It’s interesting that two people can do things completely differently, and both ways can be right. 🙂
My Target card gives me 5% off every purchase I make with the card and another 5% off after filling 5 prescriptions and putting them on the card. I’m a sucker for the discount and really good about tracking the spending, but I really need to work on that BUDGET. Instead I put money on the card (especially when I have the extra 5% coupon) and go home and deduct it from my checking account, then try to figure out how to live the rest of the pay period.
My cell phone company sent our rebate as a prepaid card (Visa, I think) and it came with instructions that we could also just cash it out without paying fees. You might look into that. I don’t use a lot of cash, but there are a few places that still need it–gift shakedowns at work, the water store, street vendors…
The prices of those android tablets are going to be marked down in a few months. I got me an android phone, the HTC Evo for a discounted prince at $200 then a few weeks later they had it at $100 already. I could’ve just waited had I know or been more patient.
As with my cards, I chose them for the rewards and the APR as well. I go with cards that fit my lifestyle and reward me for it.
Gift cards from AT&T Uverse? Didn’t I just watch an anti-cable TV music video by you?
Nice catch Jeff. I was wondering if anyone was going to bring that up.
I moved apartments and signed up for AT&T internet (because everyone needs internet, right?). I realized that if I got a TV/Internet deal, I would a.) get a lower rate for the first six months, and b.) get $150 in rebate cards, and c.) get free installation instead of having to pay $150 for it, and d.) save money I would have spent going to a sports bar to watch Mizzou football because now I can watch it at home.
I fully intend to cancel the TV part of this bundle soon (the end of football season or earlier) and go back to living off my HTPC and antenna.
I would gladly take those gift cards off your hands for you!
Or, if you’re not into the idea of just giving away your free $, then I’d suggest cashing them in at someplace PlasticJungle.com. You won’t get face value for them, but you’ll get cash value (or rather paypal) back in which you can direct into your savings or investment accounts without having to worry about spending them and not getting your rewards!