What stuff in my shower taught me about rewards cards
I love cash back credit cards. The idea of getting free cash back for doing nothing is an incredible concept to me. So I have a wallet full of different rewards cards that give me different kinds of bonuses at a dozen different kinds of stores that I manage like a master card shark, and search the internet for newer better reward cards on a fairly regular basis. So, when I heard that 80% of credit card rewards are never redeemed I didn’t believe it.
Because I work in the banking industry I had access to these numbers that most people don’t so I checked it out for myself. The numbers were correct, about 80% of credit card rewards are never redeemed by consumers. How could this be? I didn’t understand it until I met my wife.
My wife and I get along just fine, but our brains just don’t work the same way. Things that are second nature to her are incomprehensible to me, and things that I was born knowing she is completely baffled by. To illustrate this point, let’s take a look at my shower:
This is my shelf in the shower. You can see I keep things pretty basic. On the left there you see a bottle of shampoo which I use to clean my hair and on the right you see a bar of soap which I use to clean the rest of me. Both of these items were free because I took them from a hotel. If I am being perfectly honest, I am not convinced I really need 2 things, but my wife insists that a regular bar of soap can’t clean hair. I take her word for it because she is a licensed cosmetologist and her job is to know these kinds of things.
On the other hand, this is my wife’s shelf in the shower. My wife has explained this all to me multiple times before, but I have no idea what most of this stuff is. Special shampoo and conditioner just for blonde people? That can’t be right, can it? I am blonde and have used regular shampoo my whole life, and I am still blonde. Sugar scrub? What the hell is sugar scrub? While researching this article I did an internet search for “what is sugar scrub” and I still don’t know what it is. Why does she need 3 different kinds of cleansers? She doesn’t even get that dirty.
My wife has really great skin, so I know this stuff is important, but I just can’t understand it. My brain just isn’t wired the way it needs to be wired to understand the differences in soaps or care about the Kardashians. While my wife understands soaps and subscribes to mulitple magazines that keep her informed about the Kardashian’s changes in weight, she doesn’t really get my fascination with reward cards.
Because of my confusion about soaps, I can appreciate how my wife feels being one of the 80% of Americans that really don’t understand reward cards. Instead of wasting everybody’s time teaching her how to use them, I need to simplify things for her. So here is my “bar of soap and bottle of shampoo” method to reward credit cards for the 80% of Americans who need a really easy way to earn and redeem their credit cards.
Cash is king
Don’t mess around with points or airline miles, get yourself a card that gives you cash. Points and miles are difficult to understand, difficult to redeem, and can legally be devalued at any time by your card holder.
You know what isn’t hard to understand? Cash! You can take cash and exchange it for any good or service you want, even the stuff that you would have gotten from your points or miles from those other cards. There are no blackout dates with cash, no shipping charges for cash, and cash always comes in just the right color, and just the right size.
So when you are looking for a rewards credit card, get one that gives you cash back. A card that pays 1% cash back is not at all hard to find.
You want a card that is consistent
You want a card that has a simple, easy to understand reward program. You should know exactly where your card pays you to use it, and the program shouldn’t change. There are many cards that in addition to giving you 1% cash back everywhere will give you some additional reward at certain stores, 3% cash back at gas stations for example.
These extra rewards are great, but you should look for a card that doesn’t change these extra rewards. Some cards give you an extra reward for some introductory period like six months. Are you going to keep your card for just six months, or are you going to keep it for the long term? If your going to keep it for the long term then focus on the permanent rewards and ignore what they will give you for six months.
Many rewards cards have rotating categories where you get extra cash back at certain types of stores that changes every 3 months. That is a hassle to keep track of, and completely unnecessary. I ignore these cards completely and just get cards with permanent bonuses at the stores I shop at most.
Don’t worry about the sign up bonus
Sign up bonuses are great, but you shouldn’t pick a card based on the sign up bonuses. If I had my choice between a great card with no sign up bonus or a card that wasn’t as good but offered a sign up bonus I would always take the great card with no sign up bonus. I want to have a card for years and years, so whatever I will earn with the better rewards program will be a lot more than the $100 sign up bonus I gave up.
Don’t pay an annual fee.
Credit cards are supposed to pay you, not the other way around. I don’t even consider card companies that expect me to give them money.
If a great deal comes along, go ahead and break all of these rules
All of the above guidelines are basically good advice, but they may not be the best advice for your particular situation. I would suggest never taking the word of some know-it-all on the internet over what you believe to be the best deal.
Did you find a card that pays in points, but gives you exactly what you want with those points? Great, that’s the card for you.
Find a card with a particularly high sign up bonus? Get it. Just last year I broke this rule myself when I found a card with a $400 sign up bonus. I wasn’t about to turn that down.
How about a card that has an annual fee, but also has a cash back percentage far greater than any other card? Although rare, these cards are out there, too. I even recommended one in this article.
The only condition to these rules about breaking the rules is you have to understand the card and how it works. If reading the terms and conditions leaves you feeling like I feel when I try to figure out what sugar scrub is, you should probably just keep it simple.
So the basic rules are to get a credit card you don’t have to think about too much, because you don’t need any extra complications in your life. Get a card that pays cash instead of points or miles, with a rewards program that stays consistent, and one that doesn’t expect an annual fee from you.
So which cards specifically should you get? Check back over the next few weeks and I will have reviews of my favorite credit card rewards programs.