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Credit Card Rewards: A Losing Game that Feels Like Winning

Updated: Mar 11

I used to have a credit card for almost every store where I shopped. I love a bargain, and the allure of “getting money” for spending money was too good to resist. Who else has combed the racks at Banana Republic looking for something to buy to "earn" the all-too-tempting “spend $50, get $25 for your NEXT visit” rewards?


Let me tell you, it’s not easy to hit that $50 minimum before tax, so I have to find an extra item to reach it. But now I’ve spent nearly $75 to get $25 in rewards. It’s amazing how simple math goes right out the window when the new dress, shoes, jacket, jeans fit perfectly AND are on sale!


Over the last few years, as I’ve become more addicted to the high of saving than spending, I’ve given up my store credit cards. I put them through a shredder but occasionally sign into my accounts to make sure no one else is using my card number to buy their newest wardrobe staple.


The Credit Card Rewards Game


But I still can’t shake my travel rewards card. Two miles for every dollar I spend. They’re basically giving away plane tickets, aren’t they? I would be a fool not to grab takeout on the way home, buy the dogs those cute squeaky toys, or bring home those throw pillows on clearance at Target. I swear, I can feel myself crossing the Atlantic every time I swipe. “Put it on the card. We’ll get the points.” Even my husband has followed my lead on playing the points game. There’s no way for us to win though.


I swear, I can feel myself crossing the Atlantic every time I swipe that card.

We decided at the beginning of the year to set up a cash flow management system. As part of that process, we went through our debit and credit card statements from the last six months and categorized all expenses. When it was time for my husband and I to set a realistic budget for groceries and dining out for the month, we realized that we had consistently gone over that limit by at least $200 per month.


Math: Calling BS on Credit Card Rewards

It’s easier to do math at home in my sweatpants than at the T.J. Maxx checkout. So, I set out to calculate if the extra spending on the card would pay for itself over the course of the year.


Here’s how it breaks down:


  • Annual fee of $100 for double points per dollar spent

  • $200 per month on unnecessary dining out x 12 months = $2,400 per year

  • $2400 = 4,800 points


Sounds like a lot, right? Surely that gets one of us a plane ticket. Now, here’s the kicker. The points-to-dollar-value ratio:


100 points = $1 in value

So, for a $240 plane ticket, I need 24,000 points.


Remember, the deal is two POINTS for every dollar. Not two dollars for every dollar.

So, that means, for the $2,400 we spent to “get the points,” I can redeem $48 worth of points (4800).


We take a vacation with money we actually have, not with points that we nearly went into debt trying to earn.

The rewards game is NOT one we will win. My husband and I decided to auto-transfer the $200 per month that we no longer spend on dining out into a savings account marked “vacation.” And then we can take a vacation with money we actually have, not with points that we nearly went into debt trying to earn.


Earning Credit Card Rewards Wisely


Now, I haven’t shredded the travel rewards card. In fact, I’m still using it but differently:

I’ve “downgraded” my rewards status. We’re no longer paying the $100 annual fee to get double points. We’ll take the 1.25 points for every dollar we spend.


We put recurring expenses on the credit card (i.e. the monthly home security bill, our Netflix subscription, Internet payments, car insurance that we pay twice per year), and pay those off immediately.


By doing so, we still earn points, save them up, and use them to offset some of the costs of our vacations. But we no longer treat spending on the card as a golden ticket across the pond.

Written by Stephanie Matthews for Save10

Cover photo by Yulia Agnis on Unsplash Credit card photo by Christiann Koepke on Unsplash

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