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"A soldier will fight long and hard for a bit of colored ribbon" - Napoleon. What strikes me about this is the behavioral decision making aspect. The airlines

"A soldier will fight long and hard for a bit of colored ribbon" - Napoleon. What strikes me about this is the behavioral decision making aspect. The airlines - and many other loyalty rewards programs - have tapped deeply into the human tendency to accumulate currency, however meaningless. And as someone who is well aware of this tendency, I still gleefully watch my credit card points balance increase every month, even though it really means I'm spending a ton of actual money. I don't begrudge the airlines at all for this technique. It intrigues me than in our advanced society, we are easily fooled by simple measures.

analogmemory 10y ago
I pay all my bills/groceries/expenses with a credit card, and get points. I use to use my debit card. Might as well get something out of a process I'm already doing.
- desdiv 10y ago
  Then get a cash-back card back where you get legal tender USD back, instead of some psudo-currency that arbitrarily expires, has a shitty exchange rate, and can only be spent at limited locations.
  - daurnimator 10y ago
    I've never seen a "cash-back" card outside the USA. Here in Australia, a 2 points per $ is the best value I can seem to find. Edit: I just did some quick searching, and cash-back cards do exist here, they are just horrible value.
    - santaclaus 10y ago
      Hell, even in the states, I haven't seen a cash-back card with a reasonable rate (~5%) in years. Most cash-back cards I see are slightly less than 2% back, while with 'rewards' cards (e.g. Amazon) you can easily find 5%. If anyone can point me towards a nice cash-back card I'm def game, though!
      - posguy 10y ago
        You know that those cashback and airline miles rewards are all paid out of interchange (which is part of what the merchant pays), right? The Dodd-Frank Reforms, specifically the Durbin Amendment limited interchange on Debit transactions, killing debit rewards cards. Meanwhile, Visa's interchange rates keep getting beaten down, they're passing through 1.8% to whoever your bank is on average across all cards, with the higher end rewards cards being of limited issuance. If they issued everyone a Visa Signature Preferred card (at 2.10% interchange) like the Chase Sapphire Prefered, Visa would get sued by Walmart, Kroger and the like. Interchange keeps falling due to regulation and lawsuits, up in Canada Walmart even stopped accepting Visa. Interchange Rates for Visa: https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees-2016-april.pdf https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
      - nugget 10y ago
        Bank of America Travel Rewards is about 2.6% back in points that can be used to offset future travel expenses (airline and hotel). You have to qualify for BOA's highest tier of service, but this can be done by keeping $100k in a brokerage account. It's not pure cash back but pretty close, and importantly, the points never devalue or expire.
      - CalRobert 10y ago
        The cash back is never going to be greater than the transaction fees, currently borne by the merchant. It has to come from somewhere after all. Sadly, the current situation is: * People want to pay with cards. * Merchant doesn't want to lose 3% on every sale, but they want customers, so they take cards and have to raise prices * Everyone (even cash customers) pays 3% more for all of their stuff. Some people with good credit get about half of it back as "cash back". It might be better if we just used cash... It's definitely ridiculous to ban different prices for card vs cash (google US credit card surcharge law).
        gommm 10y ago
        The money doesn't only come from the transaction fee, it also comes from all the people who sign up for a credit card thinking they'll get points, fail to pay in time and pay enormous fees because of that.
    - true_religion 10y ago
      I don't really see the difference between direct cashback, and accumulating points and cashing out every year at 2 points to a $. Rewards cost less for the company to deliver to you, so they "give" you more of them by advertising their cost as the public listing price, and not the price they actually paid for it. Cashing out, if fair, essentially gives you the money they set aside to buy select rewards with.
      - daurnimator 10y ago
        > I don't really see the difference between direct cashback, and accumulating points and cashing out every year at 2 points to a $. I don't think that's an option I have. My credit card's points can be redeemed for points with an airline of my choice (I've heard Krisflyer points are the best value?), or used at a special overpriced online store.
    - megablast 10y ago
      ING had one in Australia, 2% cashback on all purchases. They stopped it a few months ago.
    - hrrsn 10y ago
      ANZ offer a cash back Visa of up to 1% here in NZ, but at that rate I'll stick to my airpoints.
  - p49k 10y ago
    That's not the best choice for everyone. I easily get more value from the miles by using them for flights than I would with cash back.
  - Spooky23 10y ago
    It's often not the best value. I often get a ~$150 hotel room from points dervied from $5000 in recurring spending.
    - brianwawok 10y ago
      Is get 2% cash back. I bet for $100 I could Priceline a match for your $150 hotel.
      - Spooky23 10y ago
        Probably. But I'm picky about hotels and prefer certainty.
abetusk 10y ago
I'm currently at 512 karma and counting...
- chillydawg 10y ago
  Surely you should stop forever at 512??!?!
- rev_null 10y ago
  512 karma ought to be enough for anyone.
nugget 10y ago
Yes, I had the same realization and now try to view "US Dollars" as a Government run loyalty program, and accumulate cash-back dollars instead of relatively less valuable airline miles. But the psychological amplification of an airline mile's true value (not to mention risk of devaluation) is hard to kick.
- logicallee 10y ago
  >and now try to view "US Dollars" as a Government run loyalty program This is a very deep and totally novel perspective, and you are really onto something. So, if we view it from this perspective, the Government's loyalty program sucks! You get nothing if you accumulate ten thousand, a hundred thousand, or a million points. There is zero Government reward of any kind for any use of points: the value of the points is ENTIRELY in their market value (what you can buy for a dollar) and as a 0.0000% component, any direct or indirect acknowledgment, praise, plaque, or even stuffed animal. While it MAY be silly that the government would give a teddy bear with a manacturing cost of as little as 80 cents in exchange for using its loyalty program, and paying taxes on it, in the amount of tens or thousands of the same, in fact private industry proves this is not at all so! Obviously the US government is not a private enterprise, the social contract (and constitition), and general good taste gives it some powers but not others, but some considered steps in this direction certainly might well end up a net positive for everyone. (As I wrote this comment I felt that it's so unusual and counterintuitive, even absurd, that it might sound like a satire/parody, so just to be clear the train of thought I expressed above is serious/in earnest.)
  - DougBTX 10y ago
    The US government has other "loyalty programs", for example if you buy a 10 year treasury bond instead of holding cash, they'll pay out a bonus every six months. Another way to look at it is return on investment vs risk vs liquidity. Since inflation is 0-2%, cash is worth less every year, but it is easy to buy things with it. So if you have lots of cash coming in, choosing where to store it gets more tricky: http://www.asymco.com/2012/01/24/apple-added-38-billion-in-cash-last-year/ http://www.asymco.com/2012/01/24/apple-added-38-billion-in-c...
gommm 10y ago
To be fair though, I used to pay $8,000 a year in plane ticket fees now I pay $2,000 a year and use miles, so it's a significant saving for people like me who travel a lot. But I agree that, for most people, cashback is a better value proposition than miles.`
MR4D 10y ago
Technology may have advanced significantly, but our brains are not much different than cavemen's were.

analogmemory 10y ago

I pay all my bills/groceries/expenses with a credit card, and get points. I use to use my debit card. Might as well get something out of a process I'm already doing.

desdiv 10y ago
Then get a cash-back card back where you get legal tender USD back, instead of some psudo-currency that arbitrarily expires, has a shitty exchange rate, and can only be spent at limited locations.
- daurnimator 10y ago
  I've never seen a "cash-back" card outside the USA. Here in Australia, a 2 points per $ is the best value I can seem to find. Edit: I just did some quick searching, and cash-back cards do exist here, they are just horrible value.
  - santaclaus 10y ago
    Hell, even in the states, I haven't seen a cash-back card with a reasonable rate (~5%) in years. Most cash-back cards I see are slightly less than 2% back, while with 'rewards' cards (e.g. Amazon) you can easily find 5%. If anyone can point me towards a nice cash-back card I'm def game, though!
    - posguy 10y ago
      You know that those cashback and airline miles rewards are all paid out of interchange (which is part of what the merchant pays), right? The Dodd-Frank Reforms, specifically the Durbin Amendment limited interchange on Debit transactions, killing debit rewards cards. Meanwhile, Visa's interchange rates keep getting beaten down, they're passing through 1.8% to whoever your bank is on average across all cards, with the higher end rewards cards being of limited issuance. If they issued everyone a Visa Signature Preferred card (at 2.10% interchange) like the Chase Sapphire Prefered, Visa would get sued by Walmart, Kroger and the like. Interchange keeps falling due to regulation and lawsuits, up in Canada Walmart even stopped accepting Visa. Interchange Rates for Visa: https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-interchange-reimbursement-fees-2016-april.pdf https://usa.visa.com/dam/VCOM/download/merchants/visa-usa-in...
    - nugget 10y ago
      Bank of America Travel Rewards is about 2.6% back in points that can be used to offset future travel expenses (airline and hotel). You have to qualify for BOA's highest tier of service, but this can be done by keeping $100k in a brokerage account. It's not pure cash back but pretty close, and importantly, the points never devalue or expire.
    - CalRobert 10y ago
      The cash back is never going to be greater than the transaction fees, currently borne by the merchant. It has to come from somewhere after all. Sadly, the current situation is: * People want to pay with cards. * Merchant doesn't want to lose 3% on every sale, but they want customers, so they take cards and have to raise prices * Everyone (even cash customers) pays 3% more for all of their stuff. Some people with good credit get about half of it back as "cash back". It might be better if we just used cash... It's definitely ridiculous to ban different prices for card vs cash (google US credit card surcharge law).
      - gommm 10y ago
        The money doesn't only come from the transaction fee, it also comes from all the people who sign up for a credit card thinking they'll get points, fail to pay in time and pay enormous fees because of that.
  - true_religion 10y ago
    I don't really see the difference between direct cashback, and accumulating points and cashing out every year at 2 points to a $. Rewards cost less for the company to deliver to you, so they "give" you more of them by advertising their cost as the public listing price, and not the price they actually paid for it. Cashing out, if fair, essentially gives you the money they set aside to buy select rewards with.
    - daurnimator 10y ago
      > I don't really see the difference between direct cashback, and accumulating points and cashing out every year at 2 points to a $. I don't think that's an option I have. My credit card's points can be redeemed for points with an airline of my choice (I've heard Krisflyer points are the best value?), or used at a special overpriced online store.
  - megablast 10y ago
    ING had one in Australia, 2% cashback on all purchases. They stopped it a few months ago.
  - hrrsn 10y ago
    ANZ offer a cash back Visa of up to 1% here in NZ, but at that rate I'll stick to my airpoints.
- p49k 10y ago
  That's not the best choice for everyone. I easily get more value from the miles by using them for flights than I would with cash back.
- Spooky23 10y ago
  It's often not the best value. I often get a ~$150 hotel room from points dervied from $5000 in recurring spending.
  - brianwawok 10y ago
    Is get 2% cash back. I bet for $100 I could Priceline a match for your $150 hotel.
    - Spooky23 10y ago
      Probably. But I'm picky about hotels and prefer certainty.

abetusk 10y ago

I'm currently at 512 karma and counting...

chillydawg 10y ago
Surely you should stop forever at 512??!?!
rev_null 10y ago
512 karma ought to be enough for anyone.

nugget 10y ago

Yes, I had the same realization and now try to view "US Dollars" as a Government run loyalty program, and accumulate cash-back dollars instead of relatively less valuable airline miles. But the psychological amplification of an airline mile's true value (not to mention risk of devaluation) is hard to kick.

logicallee 10y ago
>and now try to view "US Dollars" as a Government run loyalty program This is a very deep and totally novel perspective, and you are really onto something. So, if we view it from this perspective, the Government's loyalty program sucks! You get nothing if you accumulate ten thousand, a hundred thousand, or a million points. There is zero Government reward of any kind for any use of points: the value of the points is ENTIRELY in their market value (what you can buy for a dollar) and as a 0.0000% component, any direct or indirect acknowledgment, praise, plaque, or even stuffed animal. While it MAY be silly that the government would give a teddy bear with a manacturing cost of as little as 80 cents in exchange for using its loyalty program, and paying taxes on it, in the amount of tens or thousands of the same, in fact private industry proves this is not at all so! Obviously the US government is not a private enterprise, the social contract (and constitition), and general good taste gives it some powers but not others, but some considered steps in this direction certainly might well end up a net positive for everyone. (As I wrote this comment I felt that it's so unusual and counterintuitive, even absurd, that it might sound like a satire/parody, so just to be clear the train of thought I expressed above is serious/in earnest.)
- DougBTX 10y ago
  The US government has other "loyalty programs", for example if you buy a 10 year treasury bond instead of holding cash, they'll pay out a bonus every six months. Another way to look at it is return on investment vs risk vs liquidity. Since inflation is 0-2%, cash is worth less every year, but it is easy to buy things with it. So if you have lots of cash coming in, choosing where to store it gets more tricky: http://www.asymco.com/2012/01/24/apple-added-38-billion-in-cash-last-year/ http://www.asymco.com/2012/01/24/apple-added-38-billion-in-c...

gommm 10y ago

To be fair though, I used to pay $8,000 a year in plane ticket fees now I pay $2,000 a year and use miles, so it's a significant saving for people like me who travel a lot. But I agree that, for most people, cashback is a better value proposition than miles.`

MR4D 10y ago

Technology may have advanced significantly, but our brains are not much different than cavemen's were.