Rising Costs of Credit Cards

It seems like prices are climbing higher these days.

There’s been quite a bit of discussion recently, particularly about premium credit cards like the Chase Sapphire Reserve and Amex Platinum. Sure, some of it can be attributed to inflation, but it also appears to be related to changes in business strategies and maybe even a decline in usage—what some might call “encitization.”

Now, technically, no one really needs a points card, but if you use one judiciously, it can potentially be worth the expense.

I touched on some conflicting views prior to the pandemic. Points allow consumers to act in ways that can sometimes seem irrational, or even irresponsible, without facing immediate repercussions. Sure, it’s unwise to spend just for the sake of collecting rewards. I get that. But there’s an undeniable value in investing in experiences compared to, say, regular material things.

“I don’t think this is a loss felt by just the top 1%, but it’s significant enough that I might not even notice it. Rather, it feels like a little bonus, giving an excuse to buy something I wouldn’t have otherwise.”

I know it sounds irrational. Theoretically, all cash has the same value, and cash back is actually more useful than any points scheme. I recognize this, but…well, having points gives you the chance to make purchases you might normally shy away from, sans guilt.

Back in 2018, I mentioned a Weber grill priced around $1000, which, I mean, seems almost absurd now considering inflation. I would’ve never even dreamed of splurging on a $300 Dyson fan. And oddly enough, through a generous points program from Restoration Hardware, I ended up getting a whole new bedroom set.

Since that time, I’ve indulged not once but twice in extravagant Breville espresso machines using points—the Breville Barista Touch Impress ($1700) and the Breville Oracle Touch ($2500). Honestly, if I’d had to cough up cash for either of these, it probably would’ve led to quite a few disagreements at home. But hey, it’s different when you’re spending points.

The reality of the situation remains unchanged. While cash back seems sensible, points can sometimes serve as a sort of loophole for indulging in extravagance…

Previously:
Adventures in Behavioral Finance, Points Edition (May 17, 2018)

See also:
How much does cash back or points need to feel worthwhile?

Point credit card dilemma.

Money anxiety has become my part-time job.