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Living with credit, Rewards, Shopping, Travel

My rewards are costly, so I’m giving them away

Kelly Dilworth

For years, I thought of cash back and point rewards as a convenient way to trim my spending and score clothes, supplies and occasional luxuries, such as massages, for free. But as I combed through my spending history recently in an effort to combat one-too-many splurges, I realized my card rewards often cost me more money than I save.

My novel solution? I’ve started giving my card rewards away.

The problem: Rather than spend the amount I earned in cash back, I routinely go over budget when I shop with my rewards.

For example, last fall, I collected my BankAmericard’s cash back rewards as a statement credit and decided to use that credit to refresh my closet and replace some clothes that no longer fit. Instead of limiting myself to just the statement credit, I left the store with bags of clothing costing over $100 more than I had planned to spend.

Similarly, I recently treated myself to a $50 SpaFinder gift card using cash back from my Chase Freedom card. The only problem? The spa service I booked cost way more than $50.

Upgrades ended up costing us more
My penchant for using card rewards to get more value from my purchases has also gotten me in trouble. When my husband and I recently flew to Texas to visit family, I justified securing a nicer car rental and staying in a hotel after a late night flight because he had received a generous travel credit from his Chase Sapphire Reserve card.

The trouble with that is we would have saved more money if we had stuck to using our travel credit to offset unavoidable expenses, such as our airline tickets and fees. Using the credit to upgrade our travel, though, made it feel as if we were getting more bang for our buck.

Card rewards can be a great way to score deep discounts and save money on purchases you would have already made. But if you’re like me and have trouble controlling impulsive spending, card rewards can also tempt you into bigger charges.

Giving away my rewards removes temptation
My overspending has gotten especially bad over the past few months, so I’ve started a new spending diet in an effort to whittle down my monthly balances. One of my first actions has been to give away my card rewards so I’m less tempted to use them as a flimsy excuse to go shopping.

The great thing about donating my rewards is that it provides an instant happiness boost each time I feel as if I’m helping people in need.

My card issuers don’t make donating rewards as easy as some others. For example, with Capital One’s No Hassle Giving portal, 100 percent of your donation goes to the charity or nonprofit (transaction fees are waived). So I collected my cash back as a statement credit and donated that amount to a charity.

In my case, I gave $91.22 in cash back from my Chase card to the International Rescue Committee and directed $65 to the nonprofit newsroom ProPublica courtesy of my BankAmericard. It felt great to direct my rewards to causes I care deeply about.

My husband and I still have more rewards to donate on our other cards. I’m already looking forward to an evening spent going over how much we can give to organizations we support. For me, donating by cash back is much more rewarding than the short-lived happiness boost I get from shopping.

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