Welcome to Radical Personal Finances, Show dedicated providing you with the knowledge, skills, insight and encouragement you need,

to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

My name is Josh Moshitz, I'm your host, and today we're going to dip our toes over into the more seductive,

more alluring, the sexier side of personal finance. In that we are going to speak today about credit card points

and mileage games and hotel points etc. I'm going to share with you why I think that for most people this credit card

points game is basically worthless and in some cases worse than worthless. I am however going to tell you the specific

people for whom not only is this credit card points game not worthless but in fact it's extremely profitable and it is well worth

considering. Let's begin with a little bit of background. In order for you to

understand the current iteration of the credit card points game, etc, you need to understand the history of the industry.

I'm not going to lay out a hardcore history of the credit card industry, but rather just start by the integration of credit cards with airline mileage point programs, etc.

First, businesses have for a very long time understood the power of some kind of loyalty program.

One of the four ways that a business can increase its revenue is to increase the number of

purchases from a specific customer per year or per month or whatever. If you have a

customer that ordinarily comes into your

business once or twice a month and you can instead get that customer to come in

three or four times a month, that makes an enormous influence, or enormous impact on your revenue over the course of the business.

And so businesses have figured this out.

And we've all seen very simple loyalty programs where you get a little card from your favorite local

Submarine Sandwich shop and they say buy 10 subs get the 11th free or your local car wash will give you a card and say buy get 10 car washes get the 11th free things like that these are all basic forms of loyalty programs and these made their way into the airline industry at the very end of the 1970s beginning of the 1980s

when airlines figured out if we could somehow figure out how to incentivize people for flying to fly with us on our airline, then we could

get them to more frequently choose us instead of our competitors.

And so you had the concept of a mileage account.

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