I myself am the fairly recent owner of a credit card. Iv'e gone through most of my life and late into my twenties without ever needing one. I finally succumbed after many admonitions from older friends who warned, "One day you'll want to buy a house, and you'll want to have credit." So I relented. I now have a new card in my wallet. It's much shinier than my debit card. I wonder if that's on purpose.
And of course, his card has rewards, but I am loath to rack up points on it. Why? For one thing, I don't trust where the money comes from. It comes out of something called the interchange fee, which is like an ATM fee for merchants, if your ATM fees kept going up and up and up each year. Another reason is the absurdity of spending thousands to reap a small reward. Spending money on absurd little gifts is just, well, absurd. And the other problem is that you can get into massive debt chasing after these "rewards" -- it's a dangerous game to play.
What's the most absurd reward you've ever heard? Have you had a bad experience trying to collect? More absurdity after the jump...
For example, this article from the Dallas Morning News shows just how absurd it gets:
Michael Cheng and his wife, Nicole, each have four credit cards in their wallets. A Post-it note on the top left corner of each card lets them know which one to use for what. ...
In return for their purchases, they get checks or gift cards: 5 percent cash back from the Chase rewards card, 3 percent from Chase business, 5 percent from Discover and an amount equal to 1 percent from the Farm Bureau.
The Chengs, who have a stack of other cards, keep track of the cash rewards on a spreadsheet: They made $1,121 in 2006 and $1,093 so far this year. They don't pay interest on their purchases because they immediately pay off their balances. They pay no annual fees.
"We get the sense that we figured out how to play the game, and we're playing it our way," said Ms. Cheng, 43, of Centreville, Va.
More power to them, I guess. But it's not all fun and games:
If you're going to play the rewards game, beware: The credit card issuers are certainly up to the challenge, several consumer advocates said.
"There's a small number of people who can game the system, but for every consumer who games the system there's probably 25 consumers who are ratcheting up credit card debt and never are redeeming the rewards," said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.
Be prepared to spend a lot to make a lot – or a little. So far this year, the Chengs have spent $47,800 to get $1,093 in rebates. "Mind-boggling," Mr. Cheng, 42, admits.
You know what's mind-boggling? That anyone bothers to play this stupid game. I'm not going to play it, and I advise the same to everyone else who reads this. What's the stupidest you've seen out of this game?