But Soon I Will Qualify for that Toaster

I have colleagues from UBS who chase points like greyhounds chasing the mechanical rabbit.  Almost every purchasing decision is tied to the question “how many points will I get for this?”  It’s an obsession with so many otherwise calm, cool, and rational people.  Personally I think it’s both a mistake as well a misuse of time (not to mention, a misuse of money).  My main gripe is that rewards system don’t just create loyalty to a single credit card, airline, etc., it’s that they create purchasing decisions where none was imminent.  The points should be a byproduct of credit card spend, not the driver of it.

The other problem with the points system is that inflation is completely hidden.  If a Caribbean cruise that once required 50 thousand points now requires 125 thousand points, that is a real devaluation of your points asset.  And unlike currency inflation, which is the result of a complex series of events and government action, points inflation gets essentially no press, and is just the decision of a small number of people looking to reduce their own liability.  Credit card companies and airlines have considerable incentive to constantly devalue their points, and they’ve done it consistently for years.  And they never go in the other direction, reducing points required for an award.

So color me skeptical on the merits of points-chasing.  I know there exists a whole class of people dedicated to the art, and some of the best probably do figure out how to game the system in their favor.  But for most people, it’s chasing the wind.

— Tim Shields, UBS


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