Thursday, December 21, 2006

Unused Gift Cards Generate Millions for Retailers

I recently read an AP Report that outlined the windfall of profits retailers are realizing due to unused or expired gift cards.
Last winter, Best Buy Co. reported a $43 million gain in fiscal 2006 from cards that hadn't been used in two or more years. Limited Brands Inc. recorded $30 million in 2005 revenue because of unredeemed cards.

These figures are shocking. The report goes on to say, that roughly 6% of cards are unused. I know I contribute to the 6%, since I have had my fair share of gift cards that expired before they were used.

This brings up another question. When did we become so brainwashed into thinking that a gift card was a better gift than cold hard cash? For whatever reason, I always feel that buying a gift card is almost as good as a real gift and giving cash is a cop-out. After reading that report I am starting to rethink my logic. In the future I am going to revert back to the cash. And if someone says something about being unthoughtful for giving cash, I can reply, "This is the thoughtful gift, this way they will actually spend the gift. Or would you rather have me write a check directly to the store's bottom line?"

Saturday, December 2, 2006

Maximizing Credit Card Rewards

I carry two credit cards in my wallet. An REI US Bank Visa and Discover Gas Card.
Until recently, I carried only the REI Visa, due to the semi-attractive 10% cash back on REI purchases and 1% cash back on all purchases, with no maximum.
Recently, I added a Discover Gas Card for gas purchases. This card gives 5% back on gas and auto maintenance (5% on the first $1200 and 1% thereafter).

I think the REI Visa and the Discover Gas cards are a good combination. I always wondered if there was a better combo that could make me even more cash, so I decided to do a little research.

I visited each of the major credit card companies’ web site and searched for their best cash back cards. If you haven't noticed there are not that many big players left in the game, the space has consolidated quite a bit over the past years. I skipped over the basic Other Reward (miles, point) cards, since these have proved to be more of a hassle than they are worth. Cash is king!
After selecting the cards that had the best cash back, I stacked them up against my average monthly expenses.

If you were only to carry one card which should it be?

The Citi - Dividend Platinum Select looks like the best, but tops out at $300 per year. I top that by fifty bucks, using my calculated monthly expenses. If you spend less than me in a month, then that might be your card.

For me the Discover would be the best at $362.82 cash back. The actual total will be a little less ~$20, due to having to spend more than 3k to get the 1% back on other purchases, the rate is .25% to $1500 and .5% to $3,000. Not enough to matter. What does matter, is that Discover is not accepted everywhere. If the card is not accepted you can't collect your cash back.

Hybrid Method
Currently I employ the hybrid method, by using my REI and Discover Cards. This is for the reason I mentioned earlier, about Discover not being accepted everywhere. As you can see by the graphic, the return from these cards is exactly the same as it would be from using discover alone. The other added benefit of carrying two cards, is that should one be denied, lost, or over the limit, you have a backup.

The Other Hybrid Method
I looked at trying to maximize the cash back by using any combination of the cards. The formula I came up with is, using the US Bank, Discover, and Citi. This combo created $25.78 more cash back.
Carrying three cards is a pain, plus having to remember what ones to use when??? The twenty five bucks doesn't make sense for me, but it may for you.

Selecting the right cards can mean more cash back. Also, carrying the right number of cards can also impact the cash you receive. Hopefully my research can help you select the cards that are right for you. As for myself, I am going to stick the REI and Discover Combo.

Let me know if I overlooked something, or you know of another card that warrants some research.

Good Luck!

Friday, November 24, 2006

New blog, new experience.

I have read and subscribe to many personal finance / investing blogs. I treasure all of them, but recently I have always wished there was a PF blog for someone my age, income level, and life style. I found many blogs for : broke and just out of college; mid-life with kids; different investment goals. Well here you are single, mid-20's, decent income crowd.

Let me introduce myself...

I am a 25 year old computer engineer working for a large company. I make 80k a year, and previously spent 90k. After college I fell into the spiral of spending as my income increased. My financial accounting took a back seat to having a good time. I have multiple vehicles, a boat, a motorcycle, and college loans. Life is good... Now its time to get serious with my debt and long-term goals.