4/25/2008

How To: Get Kick-Backs On Purchases WITHOUT A Silly Credit Card

Wanna get a math nerd all hot and bothered? Talk about rewards cards. Some people are absolutely giddy about their rewards cards. To get folks to forget about all the risk they are about to take on , credit card companies slather you with lavish kick backs / rewards / air miles / what-have-you. Plus it rewards you for spending money, which is just what Americans need. You can even get rewards debit cards now. What is that, a gateway drug? Anyways...

If you've been reading very carefully, you may have noticed a string of comments in response to our NtJS Mailbag - Mr Credit Card article. Mr. Credit Card's estranged half-cousin (on his father's side), Mr. Smart Cards, disagreed with my anti-credit card stance in the comments. That's ok, he's entitled to his opinion, and we welcome intelligent discussion on our posted topics. His second 'pro-rewards credit card' comment stopped me dumbfounded:
"Guess I will just have to disagree with you on this one. I am surprised a frugal hacker would dismiss 3% on gas."
I couldn't believe it. I had totally overlooked a true frugal hack and great topic for a NtJS How To post: Scrip Cards.

Our child's school takes part in a Scrip card program (the one in the link is not ours, but they have lots of good info on the program in general as well as details on the kick-backs for specific merchants). It is the only fundraiser that the school has that does not cost the parents additional money (as opposed to selling T-shirts, coupon books, magazines). You are buying gift cards for with money you would have spent otherwise. For example: If your grocery budget is $400 per month, you can buy four $100 gift cards to Safeways (or where ever you shop), and use the gift cards instead of cash, debit or credit. Safeways pays 4%.

But WHY? Why would you go through all that hassle just to pay with a silly gift card?! I'll tell you why - it's really not much trouble. Each merchant's gift cards have an associated kick-back (you may know them as rewards) to the school and the student. 2.5% here. 4% there. 10%..... All money you would have spent otherwise, and with no risk of incurring debt or fees. The kick-back to the student comes in the form of a tuition discount. At first, that doesn't sound quite as attractive as say, cash in hand. But, we look at it as a 401k for tuition - it's a forced savings plan. This money won't walk off leaving us wondering where it was spent. It goes straight to tuition,with no opportunity to misappropriate it. Each month we buy a few hundred for gas, plus some for other planned expenses. This month, we replaced an appliance. We knew which one we wanted and that Sears had the best price. So we got $500 in Sears cards. Sears is also a 4% kick-back.

But here is the best part - you can sell the Scrip cards to other people. Family. Friends. Enemies. Whoever. And the tuition discounts all go to your account. We're not talking door-to-door begging here. Our extended families order a few hundred per week easily. Our order before Christmas was so large it should have been delivered by armored car.

All in all, our tuition discount from Scrip cards for this past school year was $139. That comes out to:
  • A kick-back of 9.2% to us based on money we spent
  • A kick-back of 2.9% to us based on total money spent (us and family and friends)
  • A kick-back of 1.9% to the school based on total money spent
  • 5.2% off of next year's tuition.
And we only participated for maybe 6 or 7 months. Will be interesting to see what our 2008/2009 results are.

So why did we wait so long to post about Scrip cards? Why are we not blogging/commenting up a storm, singing the praises of the almighty magic Scrip cards? Scrip cards didn't get us out of debt. Scrip cards didn't get us on the same page about money as a couple. Scrip cards didn't reconcile the budget. Scrip cards didn't get us gazelle intense about our finances. Scrip cards are not this mystical golden goose that slathers us in free money, blinding us to all of the inherent risks of the program. It's not a solution or a financial tool. It is a program put on to raise money for our school and encourage people to spend money locally. The incentive to do this is a kick-back. It's fine. We'd rather do it than try to sell cookie dough, or magazines door-to-door.

Its not without its faults.
  • There is a one week lag time from when you order the cards until you receive them.
  • Once you order, the money is spent, so no changing your mind as to where you are shopping.
  • Some kick-backs are barely worth mentioning - as little as 1.5%
  • It's a little bit of a pain in the butt if you have say, cards for a Shell gas station, yet there are none for miles, and you just need some gas. Granted this is no different than if you have a Shell rewards credit card.
Still, it's worth doing. It supports our school. It supports local businesses. And credit card companies don't see a dime of it. You won't catch us doing cartwheels over Scrip cards, but you also won't catch us signing up for a rewards credit card.

So, yes, I will dismiss your 3% back on gas. I will dismiss your "1% on everything else". I can get 8% back from Avis and 12% back from Marriott Hotels! Woo-Hoo. 4% from Lowes, 3% from Home Depot.... Hoo-Rah. All without a credit card.

And before you ask - These must be purchased with cash or checks.

4 comments:

Mr. Smart Cards said...

I am glad you are making some money... but your blinding hate for credit cards companies still has you leaving money on the table. And that is what is silly my friend...

The 1% on everything else you scoff at does not really come into play for me ....just like your script cards, I purchase gift cards from the grocery store (netting me the 3%) when I know of an impending purchase at a given store.

The other thing that my credit card allows me to do is run everything I buy through upromise. Last time I checked you cant do that with gift cards. So your not adding that money.

While we are at it another thing you cannot pay with gift cards are bills. So there is a butload of money going out of your pocket with no kickback.

The last thing I will say is that the evil company that I choose to do business with actually treats me like a good customer even thought they are basically losing money on me. They alert me when something strange on my account happens. Whenever I travel, I get a call after the first purchase, and its them checking for my approval. If that charge was fraudulent, I would not pay.

and on, and on, and on.....

(not) the Jet Set said...

No, Sir. It's the greed thats blinding you. As I stated, this really isn't a huge deal, and neither are rewards cards. What's nice about the Scrip cards is that besides getting a discount off of tuition, it is also a fundraiser for the school. Meaning no 'mandatory' $50 sweatshirts to buy, and no door-to-door sales.

You can have your Upromise. If we want to put money into a 529 for college, then we'll do just that. And we do. It's not hard.

What are you doing? Paying your mortgage on a credit card? Other than that, our monthy bills - gas, electric, and phone - are not that high. Maybe you are spending a "butload" on them, but we are not.

So it looks like you are running every dime you spend through you EvilCard. That is yhe choice you've made, and the risk you have taken on. You've chosen to pay with a credit card, and then pay off the card, allowing EvilCorp to get their cut from the retailer (for doing very little). Then they turn around, toss you a pat on the head, and a hearty, "good boy..."

I can see that you are quite enamored with your card compnay, who really, really likes you. Let us know how that goes when things aren't so rosey.

mr. smart cards said...

what do you mean when things are not so rosey? I strive to save money first and foremost. I pay myself first. I reduce energy costs and try to live green..... then I take the kickback.

All these things are things that I would normally buy and or have to pay for.....

THERE IS NO RISK! HELLO!

BTW ..I do not understand your sweatshirt comment.

You seem self righteous and close minded.

(not) the Jet Set said...

First, I don't appreciate your tone. We welcome commentary and debate here, but you are walking a thin line between commenter and troll.

What I mean about "when things aren't so rosey" is that your plan - that of rewards cards - is based on the 'best case scenario'. The problem with families is that there are people in them. The problem with money is that life happens. Maybe it's a career crisis, maybe it's medical crisis, maybe it's ID theft and it takes 8 months to clean up. There is so much that can go wrong here, that it's not even funny. Something you will notice is that a lot of financial pundits are talking about how shift your investments for a down market, what to do in a down economy, how to handle the credit crisis. If you listen to Dave Ramsey's financial advice, and I'm guessing you don't - it doesn't change based on good times or bad times. It always works.

No risk!? Give me a break. These companies are snakes! They will always find a way. Besides that, we are paying our bills once. We go to the grocery, shop, and pay. Done. How are you not adding risk by adding the layer of complexity of paying by credit card, waiting until the CC bill comes and then paying again? A lot can happen between those two points in time. Bank account snafus, payroll errors... There is more than enough risk to go around here - even if you are relying on auto-bill-pay. It just takes one slip up - not necessarily by you - and it all comes crashing down. And no-one assumes any responsibility in that situation - it all falls on you. There are inherent risks. People like to harp on 'irresponsible spending' in regards to personal debt and credit card debt. That is not the case as often as it is assumed.

As for the sweatshirts... I'm guessing you don't have kids in school. Schools are hurting for money as much as anyone these days. With budget cuts from the states and counties, the schools turn to fund-raisers to help. And 'fund-raisers' usually means bleeding the parents dry or some terrible, demeaning activity. Some schools have kids gathering donations on the side of the road like beggars, some have expensive team gear for sale that is not optional, some have the kids selling crap door-to-door 3 or 4 times a year. Programs like Scrip cards allows us to support the school as well as getting a tuition discount. Maybe the article wasn't clear on that, but those are two different things. Our school has this program and other legit fund-raisers as opposed to the crummy ones I listed above.

Yes, because everyone proudly living debt/credit-card free is clearly self-righteous. Look - we've been there. We've done that. We're not going back. We've seen the other side and it is easily better. We've had credit cards before, and they really aren't that great. Closed minded? We've lived both ways and have chosen this one. We've also chosen to share our thoughts, opinions, and experiences here. Our intent is to inform and educate, not to judge (ahem...) or demean. Have you lived debt-free? Credit-card free?

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