Why The Rakuten Membership Rewards Portal May Be A Bad Deal
About a year or so ago there was some big news in the miles and points world. New Rakuten portal members could earn Membership Rewards points instead of just cash back. And it was at an amazing 1 cent to 1 point ratio, we felt like we had struck gold! This perk was added to existing accounts as well about 6 months ago and pretty much everyone jumped on the bandwagon. I doubt anyone asked if the Rakuten Membership Rewards portal was a good deal or not at the time. But, it is something we should be asking ourselves for sure, especially these days.
What Do You Mean? How Could This Be A Bad Deal?
It is pretty conventional wisdom that the Rakuten Membership Rewards portal is the best thing since sliced bread. Who wouldn’t want to earn one Membership Reward point instead of a penny? I mean the points are worth more than a penny after all!
Let’s look at this a little differently. Would you buy Membership Rewards points at 1 cent a piece, right now? Some for sure would, because they value MR points at well over a cent. While others would say no way, why would anyone pay that much for points?
Well that is exactly what you are doing in this scenario. You are forgoing 1 cent in cash back for 1 Membership Reward point. While I am not a huge proponent of opportunity cost, because I think we normally do much better than 2% cash back on everything. For some reason I can’t help but shake this one.
Another thing to consider is sometimes people will forgo a higher cashback payout from another portal to take the Membership Rewards points. That muddies the water even further.
Should We Adjust, Especially In These Times?
Many of us are sitting on a pretty healthy stash of miles and points right now. Because of that should we be focusing more on cash back? It is something I have been discussing for a few weeks now.
It is a question everyone should ask themselves, even if it is something you would have never considered just a few months ago. With travel looking pretty sparse, or not enticing, over the next 6-12 months our balances will only continue to grow. Plus, we are all earning more than we are burning right now even if it is at a much slower rate than normal.
When you add all of that up, plus people having financial troubles, should we switch off of the Membership Rewards earning on the Rakuten portal?
Don’t Forget The White Knight!
On thing that we shouldn’t forget is the American Express Schwab Platinum card. If you have one of these in your wallet then you will always take the Membership Rewards points. That is because you can cash them out at 1.25 cents each when you carry one. That renders this discussion moot since 1.25 cents is always better than 1 cent.
Even if you decide not to cash them out you have that safety net, you literally get the best of both worlds.
While this debate could be had with all points earning, since you are forgoing cash back for miles and points earning, this particular one sticks out to me for some reason. I don’t think you can go wrong with either decision really. And while this seemed like an easy decision just a few months ago, it is something everyone should at least consider during these times.
Is the Rakuten Membership Rewards portal a bad deal? No. Does it make sense to still go with cash back right now instead? It could…that totally depends on your situation though.