For the first step in cutting my spending in 2013, I have cancelled my home delivery of the newspaper. I do read the newspaper and I sometimes benefit from the coupons but I think the benefit decreases more and more. The Sunday newspaper is really what I read and I am sure at times I will still pick up the Sunday newspaper.
Home deliver cost about $175 for the year and even if I pick up the paper once a month at the store, I would still save about $125 for the year. This is over my $50 minimum spending cut to qualify for the challenge. I don't know that I will pick up a copy of the paper at the store more than 3 or 4 times so this had really become wasteful spending on my part. I am not cutting something I need but something that I like but don't really make as much use of as I once did.
This would be an example of 2 kinds of debt potholes that are described in other posts. For one, this was an automatically renewing subscription that I was not intentional about reviewing and renewing each year. Secondly, this was something I used, but my usage was decreasing and again allowed me to automatically keep spending for something I was not using.
So, 1 down and 51 challenges to go.
Savings tally:
1) cancel Newspaper save $175 / year
Have you cut any spending yet this year? This small beginning does not cover the 2% loss in my paycheck from the tax changes, but it's a start.
Tuesday, January 15, 2013
Saturday, January 12, 2013
Cut Spending 2013
Cut Spending in 2013 by taking Steps in Stewardship
We seem to be fighting to get congress to cut spending to reduce the multi-trillion dollar deficit, but have you set a goal to cut your own spending?
Unfortunately, congress seems to represent us well in their inability to cut spending and assuming or presuming upon an increase in income. So I am challenging myself to cut spending this year and I am hoping that you will accept the challenge as well. Even though you can afford something, doesn't mean that it is wise to buy it. Very little effort is required to find at least some ways to cut spending. So this is the stewardship challenge for 2013. Find ways to cut spending all through the year.
Consider some goals for this challenge:
1 cut per month
2 cuts per month
3 cuts per month
4 cuts per month
1 cut each week!!!! That's 52 items in 12 months.
Those numbers sound actually pretty easy if you are thinking you can count cutting out lunch. So let's say that a cut has to save you $50 in order to count. Should the standard be higher? Let's just get started and find out. January is almost half over so don't delay. If you cut 52 items of $50 then you would save $2600 this year. So maybe we should make it a goal of 1 item per week per $50,000 of gross income or portion. For example if you make $40,000 your goal would be 52. If you make $68,000 per year, your goal 104 items. If you make $130,000 your goal would be 156 items or 52 items at a minimum of $150 each.
The rules or goals are not really important. If the hurdle is too low, raise it. One thing we know is that God promises to give wisdom when we ask for it. Solomon asked God for wisdom. There is wisdom in diligence so keep trying to find new things each month.
Check in to see how we are doing and share ideas. Together we will......
Related posts for this series can be found by searching for tag: Cut Spending
Grace to you and May God grant you wisdom and diligence in your efforts to take steps in stewardship.
Tuesday, September 25, 2012
Homeowner's Insurance Increases Not Always Appropriate
Taking care of your finances requires constant diligence and attention. The items we automatically renew without much if any review, need to be reviewed. I'm not suggesting that you switch companies for a lower rate every time your service contract is up for renewal. I am suggestion that you take just a few minutes and review the items before paying the renewal.
I think of it as at least giving my renewals the Smell Test. To be a good Smell Tester, you have to pay attention to general changes in your life, the economy, and have a sense of what is a reasonable range of increase for whatever service contract you are renewing.
My most recent example is my homeowner's insurance policy. I have had a great relationship with my insurance company and the rates have always been within reason of competitors and worth the value for me. However, as I opened my annual renewal for this year, the amount seemed more than 20% higher than last year. The quick Smell Test said, that doesn't seem right, so I laid it aside to review it later. The problem with that is, later comes later than the cancellation of the policy if I am not careful.
Now that it's later, and I need to pay to avoid cancellation, I have no time to go shopping and I can easily just resign myself to paying the increased rate. But 20% higher is still nagging me so I break down and call the agent. Actually, I break down and call the agent after being unable to login to my account online. When you only login once a year, it can be hard to remember your ID and password.
Fortunately, my phone call paid off. I called to pay my bill and then, almost as an afterthought asked why it increased so much. The agent pulled up the account and indeed it had gone up significantly, but he calculated only a 15% increase. Apparently the policy increased last year and I just paid it without questioning the 15% increase last year.
I can see an increase of 2 to 4 percent, but I need to have some justification for any more increase since the economy is not recovering significantly and the CPI or cost of living for this area is not really increasing by more than that range. So that is my range of reasonableness.
As the agent researched and asked questions I answered years ago when I bought my house there seem to be a serious lack of information on my policy. First of all, if I had a wired in alarm system and an internal sprinkler fire system when I bought the house, chances are I still have those items installed now. When was the last time you heard someone ripped out the alarm system wiring or the fire sprinkler system in their home? Apparently, the insurance company is not so sure that is a rare thing to do.
In addition to this missing information, the increase this year was justified by the insurance company due to the increased cost of roof replacement in my area. Due to wind, storms, heat and natural occurrences, this happens often in my part of the country. However I don't have to pay to replace my roof. Hmmmm.
My policy is for a condominium and not a single family home. In a condominium, the roof is owned jointly with your HOA members and the HOA fees are set aside to pay for roof repair and replacement. Hmmmm, again.
My agent very quickly realized the explanation was not lining up and offered to research further my account and call back with an adjusted rate. In the end, I not only got a lower rate since I was not paying for things I did not need to buy, but I also got a refund for the same items that escaped my attention last year.
Total Savings for diligence: $ 123.42
Satisfaction and peace: Grateful to God for His leading and prompting to call and inquire.
Warning: Review all policy renewals!
For auto, home, health and all insurance policies, you should review the renewals for any increases every period they renew. Generally, most policies are given an annual rate that you may pay monthly, quarterly or annually.
Reviewing renewals then, is done once a year when the rate changes and not with each payment.
How to:
1. Keep a copy of the policy and the invoice in a file. [see Record Keeping notes].
2. Compare this renewal invoice with the prior one - whether it is for a month or a year or other period.
3. Calculate the percentage of increase in the invoice amount.
4. Compare the percentage increase to the percentage increase in your annual salary.
5. Call the agent and ask for an explanation of the increase so you understand what changed.
6. If you are unsure the explanation is sufficient or do not understand why the rate changed,
consider calling someone you trust to review it with you again or call a competitor for
a comparative quote before renewing your policy.
7. Pay your policy on time or switch to a new policy before the insurance cancellation to
avoid creating a period of being uninsured or causing in some cases an increase for
pre-existing conditions as in health insurance.
to research any increases or changes you may need to make.
* Don't assume the renewal is an error, just do your due diligence and make sure you
know what you are paying for.
* Keep a good working relationship that is open, honest and mutually respectful to ensure that
you are working together with your best interest in mind.
* You are your own advocate, not your agent. Your agent provides a service as an expert in their
field.
I hope this is helpful information. Leave a comment if you think I've left something out and help others as well.
I think of it as at least giving my renewals the Smell Test. To be a good Smell Tester, you have to pay attention to general changes in your life, the economy, and have a sense of what is a reasonable range of increase for whatever service contract you are renewing.
My most recent example is my homeowner's insurance policy. I have had a great relationship with my insurance company and the rates have always been within reason of competitors and worth the value for me. However, as I opened my annual renewal for this year, the amount seemed more than 20% higher than last year. The quick Smell Test said, that doesn't seem right, so I laid it aside to review it later. The problem with that is, later comes later than the cancellation of the policy if I am not careful.
Now that it's later, and I need to pay to avoid cancellation, I have no time to go shopping and I can easily just resign myself to paying the increased rate. But 20% higher is still nagging me so I break down and call the agent. Actually, I break down and call the agent after being unable to login to my account online. When you only login once a year, it can be hard to remember your ID and password.
Fortunately, my phone call paid off. I called to pay my bill and then, almost as an afterthought asked why it increased so much. The agent pulled up the account and indeed it had gone up significantly, but he calculated only a 15% increase. Apparently the policy increased last year and I just paid it without questioning the 15% increase last year.
I can see an increase of 2 to 4 percent, but I need to have some justification for any more increase since the economy is not recovering significantly and the CPI or cost of living for this area is not really increasing by more than that range. So that is my range of reasonableness.
As the agent researched and asked questions I answered years ago when I bought my house there seem to be a serious lack of information on my policy. First of all, if I had a wired in alarm system and an internal sprinkler fire system when I bought the house, chances are I still have those items installed now. When was the last time you heard someone ripped out the alarm system wiring or the fire sprinkler system in their home? Apparently, the insurance company is not so sure that is a rare thing to do.
In addition to this missing information, the increase this year was justified by the insurance company due to the increased cost of roof replacement in my area. Due to wind, storms, heat and natural occurrences, this happens often in my part of the country. However I don't have to pay to replace my roof. Hmmmm.
My policy is for a condominium and not a single family home. In a condominium, the roof is owned jointly with your HOA members and the HOA fees are set aside to pay for roof repair and replacement. Hmmmm, again.
My agent very quickly realized the explanation was not lining up and offered to research further my account and call back with an adjusted rate. In the end, I not only got a lower rate since I was not paying for things I did not need to buy, but I also got a refund for the same items that escaped my attention last year.
Total Savings for diligence: $ 123.42
Satisfaction and peace: Grateful to God for His leading and prompting to call and inquire.
Warning: Review all policy renewals!
For auto, home, health and all insurance policies, you should review the renewals for any increases every period they renew. Generally, most policies are given an annual rate that you may pay monthly, quarterly or annually.
Reviewing renewals then, is done once a year when the rate changes and not with each payment.
How to:
1. Keep a copy of the policy and the invoice in a file. [see Record Keeping notes].
2. Compare this renewal invoice with the prior one - whether it is for a month or a year or other period.
3. Calculate the percentage of increase in the invoice amount.
4. Compare the percentage increase to the percentage increase in your annual salary.
5. Call the agent and ask for an explanation of the increase so you understand what changed.
6. If you are unsure the explanation is sufficient or do not understand why the rate changed,
consider calling someone you trust to review it with you again or call a competitor for
a comparative quote before renewing your policy.
7. Pay your policy on time or switch to a new policy before the insurance cancellation to
avoid creating a period of being uninsured or causing in some cases an increase for
pre-existing conditions as in health insurance.
Additional Cautions:
* Review insurance renewals as soon as you get your bill in order to give yourself timeto research any increases or changes you may need to make.
* Don't assume the renewal is an error, just do your due diligence and make sure you
know what you are paying for.
* Keep a good working relationship that is open, honest and mutually respectful to ensure that
you are working together with your best interest in mind.
* You are your own advocate, not your agent. Your agent provides a service as an expert in their
field.
I hope this is helpful information. Leave a comment if you think I've left something out and help others as well.
Tuesday, September 4, 2012
Lowering Bills can be Time Expensive
Today I finally succeeded at lowering my phone bill. Hooray!! Yes, I am celebrating - and wildly so. This is quite an accomplishment and it has taken time and effort.
Technology is constantly changing. To keep up will cost you time, but could save you money. If you don't keep up, it could cost you both time and money. A lot of money. And sadly, you won't really notice, because we are consumers who buy new things and we are not use to getting rid of things we are not using. We tend to just put them in storage or let them sit where they are until.... well, until we notice we didn't get rid of them I guess.
The bills for basic services for phone, internet and television - or rather 'media' continue to just soar every year. Bundling is chaos as far as I am concerned. I don't really want 300 television channels and I want internet connection with me - where I am - whether I am at home or not. My gadgets go with me, my internet should too.
All I really wanted to do was lower my home phone and internet bill since I rarely use them any more. I had not planned on completely canceling them, just lowering their luxury items that I not only don't use any more, I can't recall if I ever used them in the first place. I traveled with my job for a couple of years, so I had added internet Wi-Fi on the go at hotspots. This was before mobile broadband and the wide availability of free Wi-Fi at Panera Bread and McDonald's. I wonder if I could just buy a membership at McDonald's for Premier service that would include unlimited, private wi-fi, and 1 $1 drink a week. After all, as McDonald's knows, it's about distribution. The phone company still thinks it's about bundling services. Even at McDonald's, I order a la carte.
Let's get back to the phone bill. After 5 phone calls, 3 of which I was put on hold for over 1 hour each, I was able to remove the traveling Wi-Fi from my home phone. After all, it's now included in your home internet service anyway according to their commercials. If that's true, then why didn't they take it off my bill themselves? That's a whole different issue I'd like to discuss later.
My phone bill with home phone, internet of 6mps speed, unlimited long distance, and television was costing me $169 a month. I don't remember the last time I answered or made a call on my home phone service. I watch very little television anymore. I don't travel with my job to need the traveling Wi-Fi, where most airports were not accessible anyway.
Removing unlimited long distance saved me $37 a month and I still maintained a basic phone service with no benefits. That means I can still dial 911, I can still make local calls. I can still answer if you call me. However, I no longer have caller-ID, call forwarding, voicemail, or anything else they listed I had and never used before. Caller-ID would be missed if I actually answered my home phone. Since I don't, that just won't be a problem.
Removing the traveling Wi-Fi, saved me $9.99 a month. The total of $47 a month adds up very quickly. The savings on the home phone, partially including a savings on the list of taxes on the unused services. Again, that's another subject for us to discuss at another time.
At the time I purchased my home phone bundle, this was the best deal for my usage and local area. However, with FIOS and U-Verse and mobile broadband, this is no longer the best deal. I have more Wi-Fi gadgets, but all my wireless connectivity is tied to being at home. That simply doesn't make sense anymore. So I replaced traveling Wi-Fi with a T-Mobile mobile broadband for $33 a month.
That does not however reduce my savings to $17 a month. You see, I added a smartphone a year ago and I was spending an extra $20 to $60 a month on my phone for data downloads to play Games with Friends. Not a very smartphone. They should call it a Funphone or a FriendPhone instead. I will concede however, that I spent $33 a month to save $30 a month. I gained the ability to use my mobile broadband for my phone data, iPad, Kindle Fire, Tablet PC, and share my connection with a friend. I can connect up to 5 devices at once and there are no overage charges. If I go over my usage amount, the speed does slow down, but I have not had that happen yet.
Keys to success:
1. Review bundles, gadgets and technology once a year and adjust.
2. If you get put on hold when you want to cancel a previous service, hold your ground. You should not pay for what you do not use. There are other companies out there to do business with.
3. Don't bundle unless it's the best option for the price and the lifestyle.
4. Family plan bundling is not always a savings. It might just keep you locked in longer that you should be to a bad plan when things change.
Money Management is ongoing every day, and you can be good at it.
Reduce the Debt.
Reduce expenses by reducing overpaying for unused services.
Technology is constantly changing. To keep up will cost you time, but could save you money. If you don't keep up, it could cost you both time and money. A lot of money. And sadly, you won't really notice, because we are consumers who buy new things and we are not use to getting rid of things we are not using. We tend to just put them in storage or let them sit where they are until.... well, until we notice we didn't get rid of them I guess.
The bills for basic services for phone, internet and television - or rather 'media' continue to just soar every year. Bundling is chaos as far as I am concerned. I don't really want 300 television channels and I want internet connection with me - where I am - whether I am at home or not. My gadgets go with me, my internet should too.
All I really wanted to do was lower my home phone and internet bill since I rarely use them any more. I had not planned on completely canceling them, just lowering their luxury items that I not only don't use any more, I can't recall if I ever used them in the first place. I traveled with my job for a couple of years, so I had added internet Wi-Fi on the go at hotspots. This was before mobile broadband and the wide availability of free Wi-Fi at Panera Bread and McDonald's. I wonder if I could just buy a membership at McDonald's for Premier service that would include unlimited, private wi-fi, and 1 $1 drink a week. After all, as McDonald's knows, it's about distribution. The phone company still thinks it's about bundling services. Even at McDonald's, I order a la carte.
Let's get back to the phone bill. After 5 phone calls, 3 of which I was put on hold for over 1 hour each, I was able to remove the traveling Wi-Fi from my home phone. After all, it's now included in your home internet service anyway according to their commercials. If that's true, then why didn't they take it off my bill themselves? That's a whole different issue I'd like to discuss later.
My phone bill with home phone, internet of 6mps speed, unlimited long distance, and television was costing me $169 a month. I don't remember the last time I answered or made a call on my home phone service. I watch very little television anymore. I don't travel with my job to need the traveling Wi-Fi, where most airports were not accessible anyway.
Removing unlimited long distance saved me $37 a month and I still maintained a basic phone service with no benefits. That means I can still dial 911, I can still make local calls. I can still answer if you call me. However, I no longer have caller-ID, call forwarding, voicemail, or anything else they listed I had and never used before. Caller-ID would be missed if I actually answered my home phone. Since I don't, that just won't be a problem.
Removing the traveling Wi-Fi, saved me $9.99 a month. The total of $47 a month adds up very quickly. The savings on the home phone, partially including a savings on the list of taxes on the unused services. Again, that's another subject for us to discuss at another time.
At the time I purchased my home phone bundle, this was the best deal for my usage and local area. However, with FIOS and U-Verse and mobile broadband, this is no longer the best deal. I have more Wi-Fi gadgets, but all my wireless connectivity is tied to being at home. That simply doesn't make sense anymore. So I replaced traveling Wi-Fi with a T-Mobile mobile broadband for $33 a month.
That does not however reduce my savings to $17 a month. You see, I added a smartphone a year ago and I was spending an extra $20 to $60 a month on my phone for data downloads to play Games with Friends. Not a very smartphone. They should call it a Funphone or a FriendPhone instead. I will concede however, that I spent $33 a month to save $30 a month. I gained the ability to use my mobile broadband for my phone data, iPad, Kindle Fire, Tablet PC, and share my connection with a friend. I can connect up to 5 devices at once and there are no overage charges. If I go over my usage amount, the speed does slow down, but I have not had that happen yet.
Keys to success:
1. Review bundles, gadgets and technology once a year and adjust.
2. If you get put on hold when you want to cancel a previous service, hold your ground. You should not pay for what you do not use. There are other companies out there to do business with.
3. Don't bundle unless it's the best option for the price and the lifestyle.
4. Family plan bundling is not always a savings. It might just keep you locked in longer that you should be to a bad plan when things change.
Money Management is ongoing every day, and you can be good at it.
Reduce the Debt.
Reduce expenses by reducing overpaying for unused services.
Wednesday, June 13, 2012
Are You Getting Your Rewards? Part 4
I heard back from the credit card company about my diminished rewards on my new cash back credit card. To be fair, they did give me most of the rewards promised, but they still had to adjust for the first statement.
The transaction history shows the bonus rewards for each item and not the total rewards for each item. So, if you look by transaction, you will only see the bonus cash back reward above the baseline 1% cash reward received on all transactions. The 1% cash back reward on all items is calculated on the statement total on the final billing date. You will not be able to see this amount until the statement period closes and the reward is calculated and posted to the account. There will be only 1 line item for the total monthly purchases.
The first month's statement however, only had the 1% reward and customer service still had to adjust for the bonus rewards for a couple of transactions on that statement. My best guess, is that these rewards occurred between the original phone call and the follow-up conversation where the customer service representative said that they would convert the original credit card to the new rewards program as well. The transactions were just caught between the now and the not yet rewards program.
My list of cautions on rewards programs is growing. When it comes to credit card or retail rewards programs, make sure you know what you are suppose to get and know how to tell if you are actually getting your rewards.
2. Rewards you don't actually get, are not rewards.
3. Rewards that last only for a promotional period of time should be re-evaluated when that period ends.
4. Reward programs should all be reconsidered once a year for benefit.
Related Posts:
Are You Getting Your Rewards?
Are You Getting Your Rewards? Part 2
Are You Getting Your Rewards? Part 3
The transaction history shows the bonus rewards for each item and not the total rewards for each item. So, if you look by transaction, you will only see the bonus cash back reward above the baseline 1% cash reward received on all transactions. The 1% cash back reward on all items is calculated on the statement total on the final billing date. You will not be able to see this amount until the statement period closes and the reward is calculated and posted to the account. There will be only 1 line item for the total monthly purchases.
The first month's statement however, only had the 1% reward and customer service still had to adjust for the bonus rewards for a couple of transactions on that statement. My best guess, is that these rewards occurred between the original phone call and the follow-up conversation where the customer service representative said that they would convert the original credit card to the new rewards program as well. The transactions were just caught between the now and the not yet rewards program.
My list of cautions on rewards programs is growing. When it comes to credit card or retail rewards programs, make sure you know what you are suppose to get and know how to tell if you are actually getting your rewards.
Cautions on Rewards Programs:
1. Rewards you will never use, are not rewards.2. Rewards you don't actually get, are not rewards.
3. Rewards that last only for a promotional period of time should be re-evaluated when that period ends.
4. Reward programs should all be reconsidered once a year for benefit.
Related Posts:
Are You Getting Your Rewards?
Are You Getting Your Rewards? Part 2
Are You Getting Your Rewards? Part 3
Wednesday, May 30, 2012
Are You Still Not Getting Your Rewards? Part 3
If companies want to know why their rewards programs are not as successful as they think they should be, they should consider the fact that they might not be giving what they promised. I tend to give up on rewards programs when I have to audit them to see if they are really working.
As you already know, I now have 2 cash rewards cards with the same company and both cards give me cash rewards. The rewards vary depending on whether I am purchasing gas, groceries, restaurant meals, or other categories. Some categories have a bonus percentage of cash for a limited time.
Now that I have used my new card and received my first statement, I went to check on the rewards. The transaction history states that I did in fact get rewards, however, they are not the rewards that were promised. On items that should have received 3% I only received 2%. On items that should have received 2%, I only received 1%. All purchases should at least received 1% and I think that they do - so far.
So now I have to call and find out why there is a discrepancy. I'll have to follow up later with the response. I have several questions as well. How do they determine groceries if stores sell everything from groceries to televisions? The gas station is also a convenience store. I only buy gas 99.9% of the time, and yet I get the percentage cash rebate as if I bought groceries loosing 33% of my rebate.
My list of cautions on rewards programs is growing. When it comes to credit card or retail rewards programs, make sure you know what you are suppose to get and know how to tell if you are actually getting your rewards.
2. Rewards you don't actually get, are not rewards.
Related Posts:
Are You Getting Your Rewards?
Are You Getting Your Rewards? Part 2
As you already know, I now have 2 cash rewards cards with the same company and both cards give me cash rewards. The rewards vary depending on whether I am purchasing gas, groceries, restaurant meals, or other categories. Some categories have a bonus percentage of cash for a limited time.
Now that I have used my new card and received my first statement, I went to check on the rewards. The transaction history states that I did in fact get rewards, however, they are not the rewards that were promised. On items that should have received 3% I only received 2%. On items that should have received 2%, I only received 1%. All purchases should at least received 1% and I think that they do - so far.
So now I have to call and find out why there is a discrepancy. I'll have to follow up later with the response. I have several questions as well. How do they determine groceries if stores sell everything from groceries to televisions? The gas station is also a convenience store. I only buy gas 99.9% of the time, and yet I get the percentage cash rebate as if I bought groceries loosing 33% of my rebate.
My list of cautions on rewards programs is growing. When it comes to credit card or retail rewards programs, make sure you know what you are suppose to get and know how to tell if you are actually getting your rewards.
Cautions on Rewards Programs:
1. Rewards you will never use, are not rewards.2. Rewards you don't actually get, are not rewards.
Related Posts:
Are You Getting Your Rewards?
Are You Getting Your Rewards? Part 2
Tuesday, May 22, 2012
Are You Getting Your Rewards? Part 2
I have a follow up to my post about my credit card rewards from earlier.
You can see the original post here Are You Getting Your Rewards?
A week after I received my new rewards credit card, I received a phone call from the credit card issuer. The customer service agent confirmed that I had received my card and had general information about the rewards program. I explained that the new card looks exactly like the card I already had and wondered why they would both have the same logo for the rewards program but have different rewards.
That was the problem that started this whole thing. I called to inquire about why my rewards were not the same as the ones advertised and I was told I would have to get a new card. This new customer service agent however, said that they could have just converted my existing account to the new rewards program. I of course agreed that that made sense and was what I originally had hoped to accomplish. The agent upgraded my first account to the new rewards program as well. In the process however, we also noticed that the interest rate on the new card was not a low as the first card.
Now I have two cards with the same company and the same rewards and my credit line split between the two cards. Having two cards is actually fine with me since I basically have a back up. I pay my credit cards off in full every month so the interest rate difference is not affecting me right now. But the fact that the company issued a new card under the promotion of a new rewards plan and increased my interest rate without mentioning it to me, is very frustrating. I have to wonder if that was the intent of the first agent. I don't really know if the first agent was not knowledgeable to resolve my original issue, or if the first agent took advantage of the situation to earn credit for issuing a new card with a higher interest rate. Remember that the agent had told me that I could call back after I receive the new card and have them transfer the remaining credit line to the new card and close the old account. That seems like a lot of unnecessary work for me and for the company, but not if they get more interest paid to them in the long run.
Caution: Beware of rewards promotions and make sure that your rewards are not costing you more in some other way. If I carried a balance on my credit card and paid interest each month, I would now be paying interest at a higher rate of 2 or 3% above the old card while I get a range of 1%, 2% or 3% on various purchases. There are some bonus periods where I get up to 5% on specific types of purchases. I think I would end up paying them more than my rewards over time in interest if I didn't pay off the credit card each month.
Rewards programs are promotional gimmicks to compete for purchases and use of credit cards. Low interest rates don't entice you to actually use your card. Even if you use your card and pay it off each month, the credit card company makes money on the fees each time you use the card. The rewards are just a way to share some small percentage of those fees with you. Points you will never use are not rewards. Cash back cards that give cash back but charge you higher interest are not rewards.
Basically, rewards are not free. Rewards that you actually use that don't cost you additional funds to earn can be beneficial for both you and the credit card company giving a mutual, not equal, benefit to both of you. Personally, I like actual cash back cards on cards I can use for anything and everything. I am not good at getting the benefit of my rewards points on various programs. By the time I get enough points, they are about to expire or I don't have time to customize my shopping to use them.
You can see the original post here Are You Getting Your Rewards?
A week after I received my new rewards credit card, I received a phone call from the credit card issuer. The customer service agent confirmed that I had received my card and had general information about the rewards program. I explained that the new card looks exactly like the card I already had and wondered why they would both have the same logo for the rewards program but have different rewards.
That was the problem that started this whole thing. I called to inquire about why my rewards were not the same as the ones advertised and I was told I would have to get a new card. This new customer service agent however, said that they could have just converted my existing account to the new rewards program. I of course agreed that that made sense and was what I originally had hoped to accomplish. The agent upgraded my first account to the new rewards program as well. In the process however, we also noticed that the interest rate on the new card was not a low as the first card.
Now I have two cards with the same company and the same rewards and my credit line split between the two cards. Having two cards is actually fine with me since I basically have a back up. I pay my credit cards off in full every month so the interest rate difference is not affecting me right now. But the fact that the company issued a new card under the promotion of a new rewards plan and increased my interest rate without mentioning it to me, is very frustrating. I have to wonder if that was the intent of the first agent. I don't really know if the first agent was not knowledgeable to resolve my original issue, or if the first agent took advantage of the situation to earn credit for issuing a new card with a higher interest rate. Remember that the agent had told me that I could call back after I receive the new card and have them transfer the remaining credit line to the new card and close the old account. That seems like a lot of unnecessary work for me and for the company, but not if they get more interest paid to them in the long run.
Caution: Beware of rewards promotions and make sure that your rewards are not costing you more in some other way. If I carried a balance on my credit card and paid interest each month, I would now be paying interest at a higher rate of 2 or 3% above the old card while I get a range of 1%, 2% or 3% on various purchases. There are some bonus periods where I get up to 5% on specific types of purchases. I think I would end up paying them more than my rewards over time in interest if I didn't pay off the credit card each month.
Rewards programs are promotional gimmicks to compete for purchases and use of credit cards. Low interest rates don't entice you to actually use your card. Even if you use your card and pay it off each month, the credit card company makes money on the fees each time you use the card. The rewards are just a way to share some small percentage of those fees with you. Points you will never use are not rewards. Cash back cards that give cash back but charge you higher interest are not rewards.
Basically, rewards are not free. Rewards that you actually use that don't cost you additional funds to earn can be beneficial for both you and the credit card company giving a mutual, not equal, benefit to both of you. Personally, I like actual cash back cards on cards I can use for anything and everything. I am not good at getting the benefit of my rewards points on various programs. By the time I get enough points, they are about to expire or I don't have time to customize my shopping to use them.
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