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My brother-in-law told me that Dave Ramsey told him that no one ever got rich on credit card points.  Ha!  Yeah right.

As it turns out, you won’t get rich on credit card points.  Go figure.  For a while now, Husband and I have been meaning to evaluate our credit card rewards to make sure we chose the right program.  Our credit cards are both through USAA and have the option of either going for the Rewards Program (where you get points that you can spend on stuff or airline tickets or whatever) or the Cash Rewards Program (where you get cash rebates for your purchases). 

Here are the summaries of each of the programs:

       Rewards Program

   When You Buy:

  Your Points are Worth
  X% of Your Purchases
   Airline Ticket  1.00%   
   Merchandise   0.71%   
   Cash   0.83%   
   Charity   0.83%   
   Cruise     0.99%   

Cash Back Program
 When You Spend:   You Get $X Cash Back:
  First $5,000    0.45%
  $5,000 – $10,000    $22.50 + 0.85% On Purchases Over $5,000
  $10,000 – $17,000    $65 + 1% On Purchases Over $10,000
  $17,000+    $135 + 1.25% On Purchases over $17,000

Other than being slightly mind-numbing, what does this information mean?  It means that Husband and I made a bigger deal out of this decision than was really necessary.  With our cards, the most we can hope to get back on our purchases is 1.25%.  Think about it.  If we spent $10,000 on our credit card, we’d only get $125 back.  Not that we’d turn down $125, but it’s really just a drop in the financial bucket. 

Thinking that 1% seemed like a low return, I went to billshrink.com, a great tool, to compare with some other credit cards.  I found several cards with 5% cash back, which would be great if it were on ALL purchases.  But the higher cash back rates tend to apply only to select purchases like gas, groceries, restaurants, etc. 

It really makes sense that credit card companies aren’t giving out so much cash back that they are making millionaires; why, if they did, they wouldn’t be making money themselves.  Points aren’t a community service, they are an advertising technique; a way to attract customers who will pay interest and fees.  Dave Ramsey was right again.  I hope he doesn’t get a big head about it.


I’m far from an expert on anything, but particularly on credit card craziness.  Feel free to enlighten me.

Article publié pour la première fois le 24/06/2010