You’re not saving with rewards programs. (But you can.)

So, I’m a huge proponent of rewards programs. Really huge. Actually, I’m kind of addicted to Swagbucks. I’ll be starting a 12-step program, but it’ll be interrupted a lot so we can check for swagcodes.

Anyway, the thing about rewards programs is that they’re amazing ways to afford things you couldn’t otherwise. (Witness our PSP, PS3, iPod touch, various collectibles, etc.)

That said, they’re touted by a lot of us rewards program junkies as ways to “save” money. By and large, that’s just not accurate. Even if you do use rewards points to buy sensible things, it’s more a case of “not spending” as opposed to “saving.”

The difference? Not spending simply means that you didn’t put that money to a particular use. Chances are, the funds will still get sucked up in the whirlwind of random expenses that is life.

To truly save money, it has to be… well… saved. Put away. Not spent. (Yes, my prose is deep. Thank you for noticing.)

All those Black Friday shoppers who “saved” so much on gifts? Most of them couldn’t point to a bank balance and show you where they money is. Instead, the savings just allowed people to buy more items, whether for the holiday or just in day-to-day expenses.

The shoppers didn’t save the money. They repurposed it.

That’s not good enough for me. So whenever we spend rewards (usually Amazon GCs), I transfer the cost of the item into our Capital One account. This is really just an extension of the iPod fund idea — except that every cent pads the emergency fund.

When I bought the Despicable Me combo pack on Amazon, the $9.99 went into savings.

My father-in-law’s gift meant another $36.99 went to ING. (And, yes, that’s over the budget for our frugal Christmas. It was this or Facebook credits. And at least this means we saved an extra $7.)

This system also makes you more conscious of how you use your hard-won rewards points. And it helps me discern when I’m overpaying with rewards.

How do you make sure the money you “save” actually gets saved? Or do you bother with that distinction?


  1. take_flight says

    I used to follow another blog that worked exactly this way. You take what you "save" at the store, and put it in an actual savings. It really does work if your saving because you want to save, but if you're saving out of necessity, it can be hard.

    I do a combination of actually putting my "saved" money in to savings, AND re-purposing. It's what works for us.

    What I save from grocery shopping usually gets re-purposed, but, we went from spending about $250/week for 6 people to around $80-130/week for the same amount of people. That is a large number, and we have used that money to afford things we couldn't afford before. The money we save on "stuff", however, gets put away. Most of the time we have a savings for it somewhere anyway, (like a "new dryer because the one we have now is probably going to go in the next year" account. AKA the appliance account).

    That being said…we also DO have a set minimum amount that goes in to savings each week.

    • says

      Take_flight: I'm always a fan of following a mix of methods. It seems to work best and be more sustainable. And if you'd been spending that much on groceries each week… Well, repurposing at least some of it must make life a lot easier!

  2. says

    I like that distinction you make about re-purposing vs. savings. The only “rewards” shopping I do is to use my cash back credit cards as much as possible to earn cash rewards. (Of course I always pay the balance in full each month.) In the past, I’ve turned some of my Discover cash back rewards into e-credits and gift cards, but I found some restrictions on their use which made them less desirable. (Going through a seemingly un-ending cycle of “return for credit only” because I had used gift cards on the purchase was no fun.) Now I just let the cash build up for about a year and then apply it towards the balance of the card. So I suppose that fits with your re-purposing approach pretty well.

    • says

      Linda: Not everyone can be a rewards-program sycophant like me. It's okay, you're still lovable! Seriously, though, those restrictions sound kind of frustrating. I have some Chase rewards that I've been letting build up because, well, I'm not sure what to do with them. Like you I'll probably just cash them out against the balance of whatever month. I guess time will tell.

  3. guest says

    I use my Discover card for cash back rewards. I save up my points and keep a balance that is usable, then treat myself to something with part of my rewards. Sort of like knowing I have money still left in the bank. My husband and I love Red Lobster, so I get Red Lobster gift cards, 45 points = $50 cash. We haven't paid to eat at Red Lobster in over 3 years, so it's always an extra special night out.

  4. guest says

    I'd love to hear what sites others use. I use Swagbucks, but only for the daily poll and searching. I see lots of other things to do there, but it's kind of overwhelming. What can I do to get points if I don't want to play games, etc…

    I get cash back on my credit card by linking to websites from there. I use any discount coupon site I can find that works. My favorite is, but there are others. I also use ebates. Any other great suggestions?

    • says

      Well, I'm partial to Mr. Rebates myself. But I always just do a quick check to see which cash back rates are best: Extrabux, Mr. Rebates, ShopAtHome, Ebates. (The first 3 were rated the top 3 for highest rates.)

      I used to take surveys on Swagbucks all the time. It's probably the best way to earn rewards if you can qualify. But lately I just haven't had the time/wherewithal. Still, just winning a search a day, plus the poll and NOSO puts you pretty close to a $5 GC a month. Which ain't bad.

  5. guest says

    Thanks, Abigail. I am not familiar with Mr. Rebates or Extrabux, but I'll check them out. I quit doing surveys on all the various sites because I'd spend time, then find out I didn't qualify. The only one I do is pinecone research, which I love.

  6. Jill says

    Pinecone is only by invitation, though I don't know why. They send out short emails to get an idea of what you normally buy. When they send a survey, you will not be turned down and you will earn $3 for each one, plus an occasional freebie to try out and review.

  7. Joannie says

    I've been only doing half the job, grrr! (When is saving not saving!) Money is tight, so I've been re-purposing all these years. Time to take my "savings" and make it into really saving money. Thanks for the re-enforcement !

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