MyPoints - Rewards Visa Card Review

Well there are a lot of people on ViewPoints who seem to be enamored with MyPoints Rewards Visa, but I am here to offer the contrarian view. Basically the Mypoints card at best gives you about half a cent cashback for every dollar you spend. Read on and I'll explain why this is not a very lucrative deal for the consumer. First you should know that I do not carry any credit card if it charges an annual fee, or if it does not offer rewards. I pay balances in full each month, and never let a balance "roll" to the next month unless the interest rate is 6% or less. Even at the low teaser rates I am usually loathe to pay interest. So in other words, I demand a lot of value from a credit card before I'll use it.

Conventional wisdon says you should get at least 1% back from any decent rewards card (whether in the form of points, airline miles, or cash) and that assumes no annual fee. I set the bar a little higher at 1.5%, the cards I find myself using the most all pay 1.5% to 3% in cashback rewards. But 1% is the minimally acceptable reward payout to get me to even pull out the card and use it.

When evaluating credit card rewards, you have to look at the total cost of carrying the card. If you are paying any type of regular monthly interest (not a teaser rate), you are almost virtually assured that you will lose the net value of your rewards just from what you pay in interest. The same goes for annual fees. If you are paying even a modest $25 annual fee, that means you have to spend at least $2500 on the card just to break even (assuming a 1% reward rate). Hence I always pay in full every month and I never accept any card with an annual fee.

The other part about a rewards card that you have to ask yourself is, am I spending this money just to get the rewards? That's a dangerous mentality, and likely to keep you in the poorhouse for many years. I only charge everyday (compulsory) purchases, food, gas, cell phone, etc, money that I would spend regardless of the method. If I really need a $2000 purchase, then I'll buy it, but I never rationalize a $2000 purchase by saying "Oh, I'll get 2000 miles for this". Sounds simple, but you would be surprised at the number of people who justify the "means to the end". For their sake, I hope they have good financial advisors!

So now my value proposition is: What is more valuable in a credit card, "points" or cashback? Points don't necessarily equate to pennies in equal value, so you have to come up with what I call a "rewards ratio" or reward payout, which I like to express as a percentage or "pennies per dollar" spent. Cashback cards are easy, a 1% card gives you 1 penny per dollar spent, a 2% card gives you 2 cents per dollar, etc. Airline miles get a little tricky, a 25,000 award ticket from New York to Miami is worth less dollar-wise than the same 25,000 award ticket from New York to San Diego. Either way, you have to assume the scenario that you personally are most likely to use, then divide that value by the miles required to come up with a "reward ratio". Example: I earn 1 mile per dollar spent on my FastJet Visa card. FastJet requires 25,000 miles to get a free ticket from New York to San Diego, a ticket that otherwise would cost a normal person at least $500 at its lowest fare. So after I spent $25,000 on the card to get 25,000 miles, I now have the equivalent of a $500 reward (obviously this is only true if you really needed to fly this trip and would have otherwise bought the ticket anyway without the reward). My "reward ratio" is thus 2%, or 2 cents per every dollar I spent on my credit card. Not bad as long as I never pay interest or fees on the card. The only thing better would be a card that pays more than 2% cashback.

You have to evaluate "points" from MyPoints just like miles. You earn a minimum of 1 point per dollar spent. There are some specific MyPoints merchants on their website where you get more than 1 point per dollar, but I'm assuming average Joe American here paying average joe grocery and gas bills. As a real-world example: A $50 Target gift certificate from MyPoints requires 7500 points. When you do the math (50/7500) that works out a .66% "reward ratio", or in other words you are getting 66/100 of a cent back for every dollar you spend. That's a lot worse payback than even a 1% cashback card.

I saw a lot of positive reviews for MyPoints bragging about how people get more than 1 point per dollar for using MyPoints merchants. That's true, but I have been a member of MyPoints since 2002 and my experience is that most of their merchants offer products of dubious value. Their merchants tend to sell everyting at full list price. Example, need a fax machine? Office Depot (a MyPoints merchant) will sell you a Brother Intellifax 2820 for $259, but go to Amazon or TigerDirect (neither of whom are affiliated with MyPoints) and the same machine will run you $189. Now if you don't care that you are overpaying for merchandise, then MyPoints is fine for you. They are a convenient web portal to search for many different products, just don't expect to find the best prices for your item.

So hopefully now you see why I don't really advocate the MyPoints Rewards card. Its definitely better then a card with no rewards, but its far from the best rewards card out there. As for all the people who complained about a low credit limit, I did not have that issue. They initially approved me for $5500 (2 years ago), along with 0% for 9 months. They keep automatically raising the limit, its at $9,000 now, which is more than I'll likely ever spend in a month. As it is, I use this card for small incidental purchases from time to time, just enough to keep it active but its not my primary (or even 2nd choice) card. The one thing I do really like about this card is the FICO score estimate they give you every month, along with number of inquiries and delinquent items on your credit report. Although not very detailed, theoretically there's no need to pay for credit monitoring when you can see a snapshot for free every month. That little benefit is reason enough for me to keep the account active. I've only had to call card customer service a couple of times, but they were very friendly and helpful, no complaints there.