What’s the Points?

November 14, 2009|By David Lester

Count right now how many points cards you have  clogging up your wallet? When was the last time you actually went on a free trip or got some sort of reward from them? Have you ever thought how much more money you spend travelling across town to use that store or extra dollars you put on your credit cards to get a few more points?  
Due to the fact that I’m always trying to get the best “bang for my buck,” I’ve crunched all of the numbers and my chosen points system is the one that is the longest running. It’s called cash. I can use it to buy luggage, or gift certifcates, or travel on any airlines and my wallet is free of any cards of any kind.  It can be used everywhere and I can even save the tax or get a better price at some places when I use it. I’ve crunched the numbers and using cash for everyday spending saves you money.   
I recently tried to redeem two different points systems to get a trip to Calgary. A ticket that would have cost me $371, including tax, to buy with cash would have taken $45,000 worth of spending with one credit card and $25,000 with another card. Then on top of that they would have charged $187 or $114.80 respectively on top of my points for taxes and extra charges. I really don’t see how these point programs add up.  Here is my logic:
1. Using cash saves people up to 20% compared to using cards. You simply spend less money when you have to actually plop it down. Using cash puts a ceiling on your spending; if you’re spending virtue is in question–if you’re being naughty with your money–it’s very helpful. What I do is take $400 out of the ABM every Monday and that is my discretionary spending for the week. It has to cover everything from clothing and coffee to eating out for the whole week. If I drop it all on a crazy Monday night bender, then it is gone. I have to wait a week to get another $400 of play money.  
2. The average yearly fee for points credit cards is around $120 a year. To build the points to fly to Calgary it would take me two to three years to charge $25,000 on my card, plus two or three years of fees. Remember, the flight only costs $371. Yikes!
3. “”Perfection is achieved, not when there is nothing more to add, but when there is nothing left to take away.”  — Antoine de Saint-Exupery.  
Using a simple money clip is so refreshing. And elegant. Seriously, look through your wallet and see all the tacky crap the retailers get us to carry around. If they were not making money off the card, they wouldn’t offer them, so therefore we’re paying extra to use them.  
Cash really is king.  It keeps a ceiling on my spending, simplifies and streamlines my wallet, and gets me a better price on many things.  Now that’s a points system I can love!

David Lester
About David Lester

David Lester is a best selling author and professional Financial Coach, helping people be better with their money. David has written a personal finance book that breaks with traditional attitudes towards finance and describes his own philosophy to money that he has gained through his personal and professional experiences. His philosophy on money applies to many areas of everyday life, including banking, investing, goal setting, shopping and entertainment.