My second spook of the day. This was actually written and intended to be published yesterday, but I never got around to pushing the button (oops), so there’s a trick or treat on Halloween. What am I talking about? Having to break our days without credit cards streak two days shy of 500. Before you start bashing me for being weak and giving into the credit devil during economic meltdown times, here’s the logic behind why it was done.

But first let me point out a couple important points:

1. I’m not being paid to write this post or promote Best Buy.
2. I’m not in the Best Buy affiliate program or being compensated by Best Buy in any way. Have never been in their affiliate program. As long as they are associated with Commission Junction it’s unlikely I’ll sign up.
3. I don’t even own Best Buy stock (BBY), but will admit to thinking about buying some lately. There are some good stock deals out there, as long as you think the market is at and/or near the bottom. Who knows on that one.
4. I am just a Best Buy customer taking full advantage of the many deals they offer. Think of me like a coupon clipper on steroids.

Getting the true best, best buy

Some of you might remember me writing recently about being upgraded to the Best Buy Premier Silver Reward Zone. A requirement of staying in this club is spending at least $2,500 a year at Best Buy or bestbuy.com or, as I learned, their online mall. While I’m not going to rehash that post, you can go read it if you want the details of the program, a couple things stuck out at me:

Premier Silver members earn 1.25 points per $1 USD spent while Best Buy Reward Zone Mastercard with Premier Silver members earn 2.50 points per $1USD.

So by getting and using their credit card I’d earn double the points (and 1.5x more than I was earning before earning the Premier Silver membership) So for the $2,500 spent here is how the program awards points for purchases made at Best Buy and bestbuy.com:

Regular Best Buy Reward Zone program
$5 for every $250 spent
$2,500 spent = $50 in reward certificates

= net: $2,450

Best Buy Premier Silver Reward Zone program
1.25 points per $1 spent
$2,500 x 1.25 = 3,125 points / 250 = $62.50 in reward certificates

= net: $2,437.50

Best Buy Reward Zone Mastercard (BBRZM) with Premier Silver
2.50 points per $1 spent (at Best Buy and bestbuy.com)
$2,500 x 2.50 = 5,000 points / 250 = $100.00 in reward certificates

= net: $2,400 (4% savings)

So by getting and using their credit card and staying in their Premier Silver program I’d receive an additional 4% over whatever price I was paying. Since Best Buy already matches the price of any other retail store, this is a way to use a credit card to save money.

That comes with one important caveat.

Paying no finance charges

So after applying and being approved, they sent me the card and immediately I registered online and linked to a bank account to make sure the balance is paid every month before finance charges are ever applied. There is a 25 day grace period where if you pay the balance, you pay no finance charges.

Last night I used the credit card at Best Buy for the first time. I wanted to thank the guy at the door for saving me an additional 4%. That more than covers the gas to go back and forth from the store.

More points in the online mall

It gets even better.

Credit card owners can get 1 point for every $2 spent not at Best Buy on the credit card, including at the online mall. Considering at their online mall there are deals to earn up to 20 points for every $1 USD spent and points can start adding up fast. 

I mentioned in my last post an online mall deal they have to get 250 points for spending $50. When we went to the beach recently we booked a room for $53 through one of the online mall merchants. This merchant awarded 3 points per $1USD spent. With the promotional 250 points, this earned us 390 points. If I’d used (and since I didn’t have the credit card yet, I couldn’t) the BBRZM for the transaction I’d have received an additional 26 points (1 point for every $2 spent).

More points in game club and racing club

Probably my biggest purchases, collectively, throughout the year at Best Buy are games. Upon digging into the My Reward Zone website, I learned they have an additional Reward Zone Gamers Club which awards $10 for every $150 spent on videogames on top of your normal rewards.

So let’s go back to the $2,500 spent over a year and say I spent that all on videogames at Best Buy or bestbuy.com and used the BBRZM, here is what the point total would look like:

2.50 points per $1 spent (at Best Buy and bestbuy.com)
$2,500 x 2.50 = 5,000 points / 250 = $100.00 in reward certificates
+ $2,500 / $150 = 16 x $10 certs = $160.00 in reward certificates

= net: $2,240 (10.4% savings)

Now we’re getting into some serious savings. But it doesn’t stop there, they also have a Racing Club which awards points for (member link only):

As a Reward Zone® program Racing Club Member, you’ll get bonus points when the Best Buy™ Racing team finishes in the top 10, exclusive content and sweepstakes opportunities. I

Even though I’m not a big racing fan, joining this program for free is a no brainer. If the Best Buy driver Elliot Sadler places in the top 10 here is the details:

1st place: quadruple points (4x) for each qualifying purchase the week following Elliot’s race and when using BBRZM: 5x!
2nd thru 5th place: triple points (3x) - when using BBRZM: 4x!
6th thru 10th place: double points (2x) - when using BBRZM: 3x!

Elliot only has three more races this season (see Sadler race results), but he’s placed in the top 10 a total of 8 out of 28 races shown on the race recap page (Best Buy doesn’t show results for 10/19 Martinsville Speeday where he placed 41st or 10/26 Atlanta Speedway where he placed 25th). His best finishes to date have been 4th place (7/27/08 Indianopolis Motor Speeday) and 5th place (6/29/08 New Hampshire International Speedway), so that would have been 4x points for using the BBRZM the week following both those finishes.

Overall in 2008 thus far there would have been eight additional weeks to earn bonus points for those in the program based on Elliot’s race results. No idea if they’ll be continuing this promotion next year, but this sounds like additional bonus points for simply timing your purchase around Elliot’s top 10 places.

Don’t even have to be a big racing fan to like this deal.

Using credit cards isn’t a bad thing

Reading back through my post on why we ditched credit cards altogether, I wouldn’t change a word. We wanted to do something radical with our finances and I think 498 days later we’ve achieved that goal. Getting this credit card wasn’t about getting credit at all. I think our motive is strong.

Our goal to add more to our retirement hasn’t panned out with the way we hoped the way the market has performed over this time. In fact, retirement outlook has gotten much worse. Not because of credit card debt since we didn’t have any, but because our retirement accounts have lost a lot of value.

Not looking for sympathy votes as I know a lot of people have it worse than us. I’m hopeful that these portfolios will turn around when the economy gets better. Also, planning on getting in on the stock market at/near a bottom and be part of the group that makes money when/if it bounces back.

But back to credit cards. Something that occurred to me over these last 498 days is that they do have a lot of value when used for specific purposes. A few times I’ve thought about breaking this streak for the reason explained herein.

We certainly don’t need to do this Best Buy Reward Zone card, but hopefully the logic in the numbers above pans out. If we are going to spend the money anyway and as long as we do not pay any finance charges (sorry for the double emphasis, but it bears repeating) it is a smart decision to use the BBRZM for purchases at Best Buy and their website.

It’s also important to point to one section written 498 days ago:

Historically, we haven’t been very good about keeping zero balances on our credit cards. It’s not like we charge everything, but we are paying interest charges on these purchases which is money that could be saved instead of going into the credit card coffer

Since the BBRZM is the only credit card we have, I don’t think we’ll have any problems with this going forward. I realize this could be inviting the devil back into our lives, but believe the rationale behind this decision is sound.

I’m trying to encourage my wife to check the online mall now for as many online purchases as possible. This way we can increase the discounts. Not every store we shop at is included and it wouldn’t be practical to do every purchase through them, but we can make many purchases through them.

The only breakdown I can see in this logic is that we carry some kind of balance and pay finance charges. Then it becomes an additional expense/liability, not a bonus/perk. Your turn. Was this a bad idea? Do you see some flaw(s)?

Did this post make you go hmm?

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