Are You Fooling Yourself? Why The Rakuten Membership Rewards Portal May Be A Bad Deal

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Rakuten Membership Rewards Portal

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.

RELATED: Final Day! $30 Sign Up Bonus For New Rakuten Members

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.

Rakuten Membership Rewards Portal

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.

Final Thoughts

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.

Mark Ostermann
Mark Ostermann is a father, husband and miles/points fanatic. He left the corporate world after starting a family in order to be a stay at home dad. Mark is constantly looking at ways to save money and stay within budget while also taking awesome vacations with his family. When he isn't caring for his family or taking a weekend trip, Mark is working towards his goal of visiting every Major League Baseball ballpark.

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12 COMMENTS

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12 COMMENTS

  1. Wall, I just bought a phone for more than $1,000 and got 12x points with Rakuten, which will be over 12,000 Membership Rewards points. Wow! That is a big discount on the phone. I could always use the points for cash on a site such as Amazon, but will almost definitely convert to frequent flyer points.

    Frankly your headline “Why The Rakuten Membership Rewards Portal May Be A Bad Deal” is very misleading (clickbait?). This has really nothing to do with Rakuten and everything to do with whether you want to spend the Membership points as miles or cash. This is a decision one has to make with many cards/sites, such as the Chase Freedom card. If you had labeled the article as “Why You May Not Want to Convert Rewards points to Airline Miles” it would have been a much more general and accurate headline and article.

    • Why You May Not Want to Convert Rewards points to Airline Miles would not be accurate because this is about selecting cash back vs MR points. Once they are MR points the cashback value is less than a cent which means you would be hurting yourself. Hence why selecting them in the first place could be a bad deal. You have an option of which way to go with the Rakuten portal. The title is accurate.

  2. I never had an issue with Rakuten. I cannot say the same for TCB. There is an opportunity cost for not having to worry and fight with a company to receive the payout. The site is easy, they payout, if there is an issue, Rakuten resolves it quickly. For me, priceless…

  3. Have never had a problem with Rakuten, and currently get 15% back on several sites with. It’s simple, and I also get at least 2% cash as well by using a Chase card.

  4. Mark – you do understand you can select Membership Rewards points then pay with any credit card right? Also I have to chrome plugin so it autoregisters me when I go to a website with Rakuten bonuses. I still log in to my account on the actual website, take advantage of any benefits or promotions the retailer offers me and also can use another credit card that has better bonuses so I get that credit plus the Rakuten Membership Rewards points.

    Frankly don’t see any downside and I have never had an issue with Rakuten. Now there may be shopping portals with better deals sometimes but that would require way too much effort for (IMHO) minimal gain over what I get today.

    • I guess I am not following you. This has nothing to do with which method of payment you use but rather is it still worth buying MR points at one cent a piece (what you are doing when choosing that over cash back via the portal). With travel on hold and people’s balances at all time highs does it make sense to reconsider which one you select – that is what I was trying to get at with it.

      • nevermind, just realised that you can’t, never really thought about this before really.. always assumed it was 1MR:1cent statement credit since no one really complained.

  5. Recent and current, Rakuten ran an awesome deal of 15x back if you shopped at certain stores and if you had the Rakuten Visa card you would earn 18x back. I bit on that, now Rakuten says I did not go through their portal, the Visa card paid only 1x, when it said 3x when I entered the site. I am having more and more problems with them paying out. I did buy $3600 from Staples and have received those items. They show my shopping trips, but nada on the points. Intially I was a big proponent of them and thought using a Visa card to earn membership reward points very novel. Lately, I am starting to sour on their practices. I do not mind the 4 quarter payout, but come on Rakuten, be honest when someone goes through your portal and pay what you said you would.

    • You are not alone. Just look at the negative Rakuten comments around the internet. I too have repeatedly used Rakuten during a promotion, then had them refuse to pay out, even after sending me e’mails confirming that I should get the bonus.

      “A bird in the hand is worth two in the bush” and using Rakuten to hopefully get MR points to hopefully use after the clampdown is over is two-birds-in-a-bush to the extreme. May as well buy lotto tix.

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