... for what it's worth.
😎 Do you know what the redemption value of each SECU rewards card point will be? According to the card disclosures, the redemption value is $.01. Now don't let those decimals fool you! "$.01" = 1 cent! That's right one penny!
So let's look at an SECU member - a young, newly minted North Carolina school teacher [starting salary currently @$40,000], who wants to earn enough rewards to buy a $900 round-trip air ticket to go see her Mom in Seattle. She has a $5,000 credit limit.
❃ How many points will she need to buy that ticket?
✅ Example #1: The SECU member makes new purchases with the card of @$1,000 each month, makes regular monthly payments, and carries an average balance of @ $1,500 throughout the year. [According to the Federal Reserve the average credit card balance is actually @$6,500].
The member earns on average "2x" points on her total yearly rewards purchases! The interest rate charged on the SECU rewards card is 3% higher than on the SECU non-rewards card.
❃ How long will it take the young teacher to earn enough points to buy that $900 ticket to go see her Mom?
✅ Example #2: What if in trying to get started in life with apartment/electricity deposits, new clothes, a little furniture, car insurance, etc; our young teacher "maxed out" her card ($5,000). She then responsibly makes minimum payments to get her high interest debt repaid debt repaid.
❃ Our teacher will be paying a "bonus" 3% higher interest rate on her rewards card balance.
❃ How long will it take for her to earn enough points to go see Mom?
❃ Should she be grateful to the SECU executive leadership (ELT) team and the SECU Board for helping her out in this way? "Enticing" her to pay 3% more over several years so she can go see her Mom?
😎 Our government is doing away with the penny? It cost more than it is worth! They may be on to something...
A penny for your ... trust?
** If you are maxing out a card to pay for basic, ongoing living expenses, you're in trouble. Or, if you are using a revolving line to pay for longer-term things like furniture, you're misusing the product.
ReplyDelete** So are you saying it's good to do that on the classic card?
** Your teacher is enticed in no way whatsoever by SECU to pay higher interest. that's one of the major flaws
** Adults, including teachers, are responsible for educating themselves and making wise financial choices. true for all products.
At 226, what a shining example of 'people helping people', I hope my kids and parents never have to interact with you. why do you even work for SECU when a bank seems to be a much better fit.
DeleteWhere are they supposed to learn financial literacy? Their parents, who don't know? The school system, that doesn't teach it? Its OUR responsibility, "people helping people".
Delete2:25pm 1) Glad that you acknowledge that carrying a balance on a high interest rate rewards card is not financially prudent. Amen!
ReplyDeleteBut unfortunately, that's what the expert financial proformas said would happen to @70 % of SECu member cardholders (another commenter has said that @47% would be more realistic).
Would you get on a plane which experts said had a 47% (70%) chance of crashing?
2) If you don't use a credit card for "basic, ongoing living expenses" or to pay for "long term things", what's the purpose in having a credit card?
3) "You're misusing the card"... assume you are chastising that young teacher for being ignorant? Always thought the CU was there to help her avoid such mistakes?
4) Yes, a classic card would be a better choice than the high rate rewards card.
5) You don't think our teacher got lured by the promise of those "rewards" - like all the rest of us do?
6) "Adults, including teachers are responsible..." You're saying it's the teacher's fault?
7) The teacher's fault? Even when the experienced experts told you that you were setting up a financial test (choosing the right card) which @70% of your members would fail?
8) Again, that type thinking is why many believe that the shepherd is beginning to look, think and act like a wolf.
2:50pm 6&7) yes, realize it's an outrageous point of view, but I will stand by my comment that adults that make free choices on products have some responsibility to educate themselves, seek and listen to advice, and then use products as intended.
Delete4:37pm No, not such an outrageous idea, but are you responsible when you are misled by someone you trusted?
DeleteThe courts generally blame the wolves not the flock. Big Pharma and the opioid crisis is the latest example.
Don't think most of those folks knowingly sought addiction and death, do you?
@ 2:26 Are you making a go of it on $40,000 a year? Not much cushion there for any emergencies? Careful budgeting and frugality are the rule. SECU was started to help state employees and teachers have a safe place to get a hand up when needed. SECU should never do financial harm to those young people starting out in their teaching career.
ReplyDelete1042 what's your point? mine is spending more than you make and put the difference on a revolving variable rate credit card on an ongoing basis isn't what credit cards are for, as Mr. Blaine suggested. Agree we need to help members in that situation, but perhaps loading them up with debt and more expenses isn't the answer.
DeleteAnswers:
ReplyDeleteShe would need 90,000 points for the "free" ticket to see Mom.
Example #1: How long to earn 90,000 points? 45 months...almost 4 years... while paying 3+% extra in interest (15% to 18%) for each and every purchase without a grace period during all those months.
Example #2: Not unusual for SECU young members to have a lot of "getting started in life" expenses - necessary, not frivolous, not optional.
If our teacher pays monthly to responsibly eliminate the debt, then starts earning points again... it will be almost a decade before she sees her Mom again. Maybe longer since her points earned today will "expire" (cancelled by SECU - other large credit unions don't cancel points) by the time she starts earning points again.