I recently wrote about our use of rewards points for everyday items. It’s fabulous to not have to shell out real money for toiletries and other mundane expenses.
MoneyMateKate commented that, even when using rewards points, she won’t pay more on Amazon than she would at a regular store — where she’d be spending actual money.
This brought up an interesting issue. It’s one that I’ve meant to address for ages now: rewards points vs real money. If an item doesn’t technically cost anything, when is it overpriced?
It comes down to how you value your rewards. Do you treat them like money or true freebies? Do you comparison shop the way you would normally, or are you willing to “pay” more for things you get for free?
Free is always good, but rewards programs take time and effort. So “free” is a relative term. Also, few people have an unending supply of rewards points. Rewards GCs are a finite resource. Once they’re gone, they’re gone.
You have to decide what that credit is worth to you. Some people will happily “spend” more to save themselves real money. Others will compare prices and choose the cheapest price, regardless of whether it’s money out of the budget or out of their store credit.
I think most of us fall somewhere in the middle. Free is always better than, well, not free. Saving money is always better than spending it. And all sorts of other obvious-isms.
That said, any kind of purchase is a zero-sum game. Whatever you spend now, you won’t have later.
It’s great to get a $75 item for free — so great that maybe you’re even willing to redeem $90 of credit. But if that uses up all of your credit, the next item you buy will require actual money. In that case, the extra $15 in credit can easily cost $15 in real money.
Or maybe you’re just concerned with the opportunity cost. If you use your rewards points on an overpriced item, your credit just doesn’t go as far.
Personally, I’ll use an extra couple bucks of credit to get something for free. Past that, it just depends. If the item is pricey — say, over $50 — I’d probably pay an extra $5. Over $100, and I would consider a $10 difference.
Like I said, not spending money is better than spending it. But after a certain point, you’re wasting the time and energy you put into the rewards program(s) you use.
So what’s your take? How do you value rewards compared to real money? How much extra would you spend to use credit instead of cash?
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I do occasionally "overspend" my rewards points, and a friend recently asked me about that. I belong to several rewards programs, some are passive, and some are not. My thought is that it's free…so therefore free is better than not-free. With Swagbucks and Amazon, you have choices, but with some rewards programs you really don't have much choice in regard to comparison shopping. I try not to go overboard though.
Case in point: I recently bought snacks with Amazon GC's from Swagbucks because the kids are noming the snacks up quick on summer vacation. My friend asked me how much some snack mix was on Amazon and then told me how much they were at PriceRite. There was a dollar or 2 difference. I replied that technically my snacks from Amazon were free so there was a 100% price difference between the two, and that I welcomed the "break" from my wallet for the quickly disappearing snacks.
I would like to add though, that I usually save my Amazon GC's for Christmas and back to school shopping and often find items MUCH cheaper than in-store. Like a pair of $70 sneakers my son wanted for school. I was able to find them on Amazon, eligible for Super Saver Shipping, for $37.50. So I think it balances out.
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