The Consumer Corner
Case in Point
One popular use of credit card points is their conversion into El Al Frequent Flier points. If you could use these points for your next El Al flight instead of using them to buy your concert tickets, you might decide to pay the full price on your concert tickets and save the points for your next flight. The way to find an answer to this dilemma is to make a short list of the transactions in which you generally use your credit card points. The type of transaction which will give you the highest financial value for every credit card point should be used as a benchmark to which you compare every other potential use of the points. As an example, if X amount of points can save you $100 on your next El Al flight this summer but only $50 on tonight’s concert tickets, you would be better off paying the full price tonight and saving the points for the summer flight. Admittedly, you will not get rich from this, but at least you will get some satisfaction from making informed decisions. If you would like this column to address a specific topic or answer your questions, feel free to email Sammy at: sammybiz@netvision.net.il.
By: Sammy Fejbusch Every day we have the option to use our accumulated credit card points to purchase goods and services. For example, we can purchase goods from the credit card company’s brochure or concert tickets using the points accumulated over time. The big question is: when is it appropriate to use the points? The answer varies according to the financial value of these points to each person. In case you’re considering purchasing, say, an electrical appliance from the credit card company’s brochure, you should first compare prices with competitors. You can often purchase the same item at a lower price with a competitor without the need to use your credit card points at all. In this case you end up avoiding the dilemma altogether. On the other hand, in case you consider buying tickets for a concert at a discount by using credit card points, you should get some idea of the financial value of these points in order to decide whether or not to use them for buying the tickets. You may, however, want to save them for another transaction where you could possibly save more money. In order to assess the value of these points you should consider their savings potential in alternative transactions.
Sammy Fejbusch is the founder of New Insight Consulting Ltd. advising corporate and private clients on financial issues. He is a Certified Public Accountant and has an MBA in Finance from Hebrew University.
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April 2005 n Adar II/Nisan, 5765 n Volume 2, Issue 5