Sunday, August 26, 2007

Personal Finance Money Tip – Reward Programs

Reward Programs can offer unconvential savings opportunities. In my short experience with these programs over the last few years, I came away with these three major points to help earn extra income from the initiatives:

#1 – The best program currently available is the American Express Rewards Program, but there are some unique attributes to other programs

#2 - Not all reward programs are created equal

#3 – Make sure you do your due diligence when redeeming your points

I currently only belong to 9 reward programs ranging from the frequent travel programs from airlines, hotels, rental cars to the credit card programs such as American Express. In my short experience with these programs, I found that the AMEX Membership rewards program is the biggest and best one available. With the AMEX rewards program, you can redeem your points across travel, hotel and merchandise awards.

Continental OnePass Program wins the award for magazine and newspaper subscriptions, with over 40 subscriptions available. If you don’t travel enough to earn awards for a ticket at 25,000 miles, a magazine subscription might be a nice way to utilize those stagnant miles. For just 1,600 OnePass miles, you can earn a year subscription to BusinessWeek, a savings of $252 from the newsstand price.

When redeeming awards, make sure you shop across all of your available programs to ensure that you are maximizing your points because many of these programs might offer the same rewards at different exchange rates. Here are a few examples:

Wall Street Journal Subscription
1,200 points for a 13-week subscription or ~ 60 issues. Equivalent to 20pts/issue
3,300 Continental One Pass Program points for 230 issues. Equivalent to 14.3 pts/issue

$25 BananaRepublic Gift Card
2,800 StarwoodHotels pts for $25 gift card 112pts/$1 dollar
2,500 AMEX membership rewards pts for $25 gift card. 100pts/$1 dollar

$100 BananaRepublic Gift Card
9,500 StarwoodHotels pts for $100 gift card: 95pts/$1 dollar
10,000 AMEX membership rewards pts for $100 gift card. 100pts/$1 dollar

There are also ways to convert your points to cash or cash equivalents. The best option for me to convert my points to cash is with the AMEX rewards program

$100 Cash or Cash Equivalent
20,000 AMEX membership rewards pts for $100 gift card. 200pts/$1 dollar
Redeem 10,000 AMEX pts for a $100 Banana Republic Gift Card and then give the gift card as a gift. With AMEX, there are a significant amount of vendors that provide gift cards through this program such as: Crate & Barrel, Barnes & Noble, Dell Computers, Home Depot, etc….

Also, when signing up for these programs, please make sure you read the all of the fine print details. Most programs only keep your points as long as you are an active member, which means different things to each program. There are options on many of the airline reward programs to transfer or buy additional points, which usually come with a significant transaction charge.

In summary, enroll in as many rewards programs that you can manage. Try to earn multiple rewards on the same purchase (i.e. buy your airline ticket with your American Express card). Try to find creating ways to convert your points to cash.

If you have any other reward programs savings, please feel free to comment or email me.

Here are the links to the reward programs that I use:

American Express
US Airways

Author Disclosure: I do not own any stock of the companies mentioned in this article.

1 comment:

pfstock said...

First of all, thank you for adding PFStock to your favorite finance blogs. I greatly appreciate it.

The Citibank Dividend MasterCard is a better choice as far as reward credit cards are concerned. With this one, you earn 2% on "everyday" purchases, and 1% on everything else. They send you a check when you have more than $50 saved up.

I had an American Express Optima card that I canceled because I didn't think the reward program was very good, and AmEx is accepted in fewer places than Visa or MasterCard. If you want cash, you earn the equivalent of only 0.5% on purchases. I chose a BananaRepublic gift card once, but had trouble finding anything I liked in the store.

There are a couple of high points for the American Express cards, though. They offer purchase protection if an item you bought is lost or stolen within 90 days. And, it is the only credit card that Costco takes.