Tuesday, March 23, 2010

Why Reward /Offer Cards Suck

Ok, here's another scam to watch out for. "Reward" debit cards. These are becoming all the rage. If you haven't seen one yet, rest assured you will. They may eventually replace all offer checks sent to you by companies (things like rebates, rewards, gifts, etc.) Popular amounts are $25 - $100.

They are basically debit cards with a fixed limit for the amount the company is giving you. If you have used one, here's a familiar scenario.

Joe has a $50 debit card he got from a cell phone rebate. He used it to buy dinner last night, and has $35.42 left on it. Today Joe finishes pumping his gas. The total comes up to $38.42. Joe inserts / hands the clerk his offer debit card and attempts to pay. Uh oh, transaction denied. No big deal, Joe can use it to buy something cheaper. Except, HOW MANY THINGS CAN YOU BUY WITH A DEBIT CARD UNDER $35.00? Here's the short list of reasons why these cards suck:

  • Transactions for more than the balance of the card are denied. Yes you can split the transaction between 2 cards, if you know how much you have left on the card, and you are using it at a location where this is possible, but who has time to screw around?
  • The balance is a pain in the ass to find out. It usually involves creating an account on some website or calling an obscure 800 number and typing in many digits.
  • It screws up your accounting, if you like to track your spending through your bank statement.

Essentially, they know you're not going to be able to access the last bit of the money. So in essence, they are giving you $25-$100, but there's a pretty good chance that they may only actually have to spend about $5-$85.

The irony of it all is that they are frequently touted as being a "more convenient" alternative to traditional check payments. Keep your debit card, I'll take a good old fashioned check.

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