Why Do People Ignore Easy Money?

August 3, 2007

Why would anyone pass up free money?  I was amazed when my co-workers pulled out their credit cards to pay for lunch today and only one other person in the group had a rewards card!

Rewards Cards Savings
I was carrying my American Express Blue Cash and one lady was using the Discover Open Road card but the other 4 just had regular credit cards.  I understand some people stay away from credit cards altogether and prefer to use cash. What I don’t understand is if you’re going to use a credit card, why not use a rewards card?  That just seems like leaving money on the table. Don’t get me wrong, charging on a rewards card is not going to make you rich but you can save hundreds of dollars a year by using one.

Small Savings Matter
Something I’ve learned about personal finance over the years is that many small savings can add up to a lot of money over time. It is difficult to save or earn a lot of money all at once, so a slow and steady approach is the most likely to succeed.  One key to that success is taking advantage of the little easy things when you can. 

Easy Money Ignored
How hard is it to save a little money by using a rewards card, practically no effort at all!  It’s not just cash back credit cards; there are many other simple money-saving actions available to us that some people just ignore. 

I know one lady who paid an extra annual subscription fee for a service she no longer used simply because she didn’t take the time to pick up the phone and cancel. 

My company has an employee discount option for several major wireless carriers yet some people on our floor don’t take advantage of the $5 a month I save on my cell phone bill simply because it is not a big enough savings.  It took me maybe 10 minutes on the phone 5 years ago to set up my employee discount that saves us $60 annually.  So it took me 10 minutes to save $300 over the last five years, pretty easy money if you ask me.

Money Saving Month
Since the month just started, it’s the perfect time to sit down and come up with a list of small easy things you can do to save money this month.  The best opportunities are places where you can cut recurring costs, such as your television or phone bill because the savings continue month after month.  Using a rewards credit card is another example that will have long term savings since you’ll always be spending money.  What other simple things can we do to take advantage of “easy money”?

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Ben

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Ben
Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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14 Responses to Why Do People Ignore Easy Money?

  • SavingDiva

    I’m trying to do a better job of taking advantage of the easy money….or saving small amounts on my monthly bills…it’s a struggle, but I am making a little progress.

  • Ben

    vans girl, just do a Google search for rewards credit cards.

    Mike, I was curious and nosy so I asked who all had rewards cards.

    threadbndr, nice plan, enjoy the vacation!

    Ryan, I agree banks seem to have a fee for everything.

  • Ryan

    The top 4 easy money ignored:
    -401k employer match
    -High yield savings account, checking, or just optimizing the return on your money/investments
    -Rewards credit (though I understand why people avoid credit altogether…kind of like how alcoholics have a hard time becoming social drinkers)
    -Paying for ANYTHING from the bank.

    It’s a tough question why people don’t do these things. Before I got turned on to a couple PF blogs, my financial life was rife with ignorance of free money. Thankfully, I found my way before too long in a real job. Internet be praised!

  • threadbndr

    If I went to lunch with you, you’d see me pay with a VISA debit card *G*, but run it as credit to get the quarter back.

    You’re right, it’s not a lot of money, but even that $5 or $10 a month adds up. I’m playing a game with myself this year and putting all that type of money in a savings account. So far the quarter back, a few dividend checks (that haven’t been moved to DRIP) and rebates/refunds and such (plus the associated interest) have added up to over $300. That’s going to be a nice little kiss for the vacation slush fund!

  • EA

    For some of these things (the phone discount for example) the folks who aren’t taking advantage of it are helping to keep your cost low. Someone has to make loads of money for the phone company, it might as well be lazy people who don’t care about money.

  • Mike

    How do you know that those 4 other card didn’t have rewards attached? My credit cards don’t have anything obvious on them indicating that they’re a rewards card.

    Mike

  • used vans girl

    How do you find out which cards offer these reward schemes?

  • Ben

    Good point KMC. Most people can afford at least the minimum contribution just to get the match. The match doubles the amount you put in, pretty easy money.

    Lazy and Shadox, you’re right about people that are carrying a balance. They’re making easy money for the credit card companies, not themselves.

    Bryan, I agree, there is no such thing as a free lunch and if you don’t pay off your rewards credit card you’ll lose out. However, there are still easy things you can do to save money like cancelling subscriptions you don’t use anymore or signing up for available discounts.

  • Bryan

    Easy money always cames with a price. Could be immoral or illegal etc. but always a price that you don’t want in the end. Nothings that easy there is always a catch.

  • Shadox

    The rewards card question is a mystery to me as well, except for people that carry a balance on their credit cards – which is an altogether worse mistake in any case. Rewards cards tend to have higher interest rates and higher fees if you step out of line. For those people, the rewards card would simply be a trap and they should go for the lowest interest card available. For everyone else, rewards cards are the way to go.

  • Lazy Man and Money

    Maybe they carry a balance and are using one with a low interest rate?

    It’s been years since I’ve seen a card that doesn’t have some kind of perk whether it’s donating money to your favorite sports team or alma mater or a reward. A plain Visa just seems weird to me.

  • KMC

    Just this morning, I got an e-bill for my long distance phone – $1.01. I’ve been paying bills like that for years because I just took the time to look for a cheap plan. Like you said, it took five minutes.

    Though you don’t mention it, probably the absolute worst example is not signing up for a 401(k) to get the employer match. Ugh.

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