Oct 29, 2008 8:56 pm US/Eastern
Putting A Price On Rewards
Consumers Tend To Spend More On Their Credit Card After Receiving A Reward
MIAMI (CBS4) ―
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60 percent of consumers who carry a balance on their credit cards each month and pay interest on it, rewards can be particularly costly.
CBS
Norma Torres bargain hunts with reward cards for everything from sandwiches to shoes.
"I love the programs. I like anything that will save me a buck," said Torres.
She's not alone. Tony Tremols punches "his" meal ticket, too, and it keeps him coming back.
"If I know that eventually I'm going to accumulate some sort of free meal at a certain location, it does influence my decision," said Tremols.
That's what retailers want to hear. Whether it's money off for members or "freebies" for frequent shoppers, those reward cards reward loyalty. They sound like a good deal. But are they?
"It's buyer beware, but shopper, know yourself," explained Sharon Harvey Rosenberg, the author and blogger known as the "Frugal Duchess".
She said don't use a reward card as an excuse to break your budget. "Sometimes you convince yourself you need something new, so you can get something free that's not really free," warned Harvey Rosenberg.
So where are the deals?
For basics like groceries or items from a drugstore, a store discount card can save a consumer money most of the time.
According to Harvey-Rosenberg, "If I'm driving 15 miles out of my way and buying a bunch of "bogo", which is buy one, get one half off or free, if I'm buying a bunch of "bogo" things that I don't need, then they've really tricked me into spending more money," she said.
How about membership cards that you pay for? On that score, consumers "will" save some money but only if those discounts are greater than the membership fees.
"It might be a great deal, but until you do the math, you don't really know. You're sort of just blind shopping," said Harvey Rosenberg.
Also read the fine print for exclusions and deadlines. Not all purchases qualify, and some of those rewards deals are for a limited time only. If you don't use them, you lose them.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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