I recently met up with fellow personal finance blogger Jen from Jen On Money where we were discussing debt (were you expecting anything else?). Eventually, the conversation shifted to credit cards which then lead to rewards points and how millennials are obsessed with them.
It’s not hard to see why rewards points have become so popular over the last few years. You can earn rewards points doing literally anything. You can order food online, charge purchases to your credit cards, or just walk daily and you’ll earn points for it. However, the real question is, are those rewards points worth anything?
34 years for a free flight to Los Angeles
One of the most popular apps out there right now is Carrot Rewards since the app rewards you for making healthy choices. In my case, I earn 2 Aeroplan Miles every day as long as I reach my daily step goal of 9,600. I thought this was the best deal ever since I was earning Aeroplan Miles just by walking. That’s until I did the math.
It takes 25,000 Aeroplan Miles to claim a return flight to Los Angeles. Well at 2 Aeroplan points a day, it would take 12,500 days. That works out to about 34 years and three months. In other words, I would have walked 120 million steps and be 70 years old before I would have earned that free flight to L.A.
That is a terrible rate of return. Heck, according to Google Maps, it would only take me 827 hours (34 days) to walk to L.A. from Toronto. That doesn’t factor in the return trip, sleeping and eating, but that’s still a lot quicker than waiting until I’m retired for a free flight.
Mind you, Carrot isn’t meant to earn you free flights; I just wanted to emphasize the fact that you need to do the math when you’re collecting rewards points to see if it’s worth your while.
Collecting points that you can’t use
Another rewards points program I’ve been obsessed with as of late is Ritual. Ritual allows you to order food from nearby restaurants on your mobile device and alerts you when you should depart so you can maximize your time. The app also gives you points which you can use to claim $2, $5, or $10 off future meals.
To be fair, Ritual is excellent for what it is. There’s no denying the convenience of ordering your food in advance. Since your payments are processed automatically through the app, there’s no need to waste time paying when you pick up your food. The problem is their rewards points.
I had spent months earning rewards points, but when I was ready to make a redemption, I found out that not all retailers accepted these discounts. There were easily 100 restaurants within walking distance of my work where I could make a Ritual order, but only a dozen of them would allow me to claim any of my points. Of course, none of those places that accepted the points redemption were places I like to eat. What was the point of all that ordering?
It may sound like I’m picking on Ritual, but my real problem is collecting points that you can’t use. There was a massive stink with AIR MILES the last few years and more recently, Air Canada has said they’ll be pulling out of Aeroplan by 2020, so you really need to pay attention to what you’re collecting. I currently have 150,000+ Aeroplan points and have been trying to find flights to claim them on with no luck.
Why I’m (we’re) obsessed with rewards points?
So why am I obsessed with rewards points? Because I love free stuff! Rewards points are the modern loyalty program. As long as retailers keep offering points and programs that benefit me, I’m going to keep shopping there. I know that they’re targeting me with specific promotions, but again, if they benefit me, I’m going to collect them.
I know my spending habits and earn my rewards points accordingly. For example, I buy most of my groceries at No Frills, so I use my PC Financial World Elite MasterCard since it gives me 3 X times the points. I also use my American Express Platinum card as often as I can since the Membership Rewards points offer me quite a bit of flexibility.
Keep in mind that it’s not just credit cards that can earn you good rewards. There are a ton of restaurant, retailer, and regular loyalty apps that reward you for your everyday spending. A few of my favourites include 7-Eleven, Domino’s Pizza, and the Drop app.
Loyalty points are great since they offer us free stuff, but if we become obsessed with them, things can get out of hand. Overspending is always a concern, but even if you keep your cool, waiting 34 years for a free flight probably isn’t worth your time.