|by Jason Steele|
I am really excited about the new Sony Camera that I bought. I purchased it from Sony’s direct sales website, SonyStyle.com. It takes great pictures, and at $600, it is reasonably priced for an entry level DSLR. When I purchased it, I was presented with an offer to sign up for their Sony Rewards Credit card, offered by Chase bank. I was offered an immediate $150 statement credit, and one year, no interest financing, as well as free shipping. Finally, I was to receive 5 “Sony Points” to the dollar.
Why not, I thought. $150 in immediate saving is pretty good, and the “Sony Points” will add up quickly if I end up ordering addition accessories such as zoom lenses or an external flash. Sony Points are primarily good for Sony electronics, as well as some movie and music offerings.
Beware Of Credit Card Companies Bearing Gifts
A few weeks after the camera arrives, I got an unexpected package in the mail from Sony. In it was a USB device that looked like a game show button. I dutifully plugged in the devise, and pressed the button. Then, my web browser opened up and took me to the Sony Rewards web site. There I was told that I would receive a 20% off coupon after my next purchase charged to my Sony card. Sounds great.
Then It Hits Me
The next day, I bought lunch with my new Sony card. A week later, I received my first statement. Then it hits me. My “promotional interest rate” of 0% was good for the camera, but my subsequent charges will incur interest until the camera is paid off. D’oh! I fell for the oldest trick in the book!
Thankfully, I have enough money to pay off my balance in full. I will pay off the $500 owed on the camera, after taxes and the statement credit, in order to avoid a year’s worth of interest on the $6 lunch.
Does This Make Sense?
Probably not, but let’s see: $6.00 at an APR of 11% is only 66 cents of interest for the year. On the other hand, the $500 sitting in my bank account would earn 1.25%, or $6.25 over the next year. Even a money market savings account might have returned $10. The problem is, the only thing I hate more than carrying a balance is paying interest to credit card companies. I am also free to use the Sony card as a backup, without incurring interest.
Why Did I Bother?
First, it is worth noting that Sony products are pretty much price fixed. No matter where I looked, any vaguely reputable dealer was selling this camera for the same price. Since I was saving $150, it would seem like I was receiving a good deal, but the more I think about it, the less I am convinced it was worth it. How could a free $150 not be worth it? While the shipping was free, I did get hit with sales tax. Since Sony has a store in my home state, they must charge me tax on mail order purchases. My local tax rate is 8%, and it applies to the full $600. Remember, the $150 was a statement credit, not a discount from the sales price. If I had ordered from another company without a location in my state, like Amazon, there would have been no sales tax, and likely no shipping on a large item like that. So right there, my $150 savings is down to $106.
Next, I could have gone to one of those frequent flier associated shopping links, such as Delta’s SkyMiles shopping mall. There, I could have chosen from several electronics retailers that would have offered me 2 miles per dollar spent, no tax, and free shipping. If I figure that Delta SkyMiles are worth 2 cents per mile, then I gave up $12 worth of SkyMiles from the Skymiles Shopping alone. Then, add in another 1.25 miles on Delta or many other airlines that I would have missed out on from using my Starwood Amex. All told, I missed out on about $20 worth of miles in addition to the $46 in taxes, so I am really up only about $75, or about half of the $150 statement credit.
When To Take A Sign Up Bonus
Lots of reward cards offer sign up bonuses. In fact, you can’t pay for anything at a department store without getting a credit card offer. No, I do not wish apply for a Target card in order to receive a 10% discount on my sock purchase today. With airline affiliated cards routinely offering tens of thousands of miles, often enough for a free trip, it is difficult to accept credit card offers from every place that you shop.
While determining how many credit cards you can have before your credit score suffers is as much an art as a science, I don’t want to find out the hard way I have too many. I wanted to conserve the number of credit cards I have, yet I thought the $150 statement credit plus the year free financing was a good deal. In retrospect, I should have remembered the old American Express slogan, “Don’t Leave Home Without It.”