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Comment by stranded22 | Hacker News Reader

I work for a company that used to offer points back to their members. They closed it down after 15+ years - they honoured all they should, but it highlighted the problem to me. The points are not cash - they are only cash once it has hit your bank account. If the company closes, you have nothing.

Never, ever, ever think cashback or points based sites as your money/savings. Take it out as soon as you hit the minimum threshold.

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Of course, you must realize that if you substitute "entry in the bank database" for "points", your (pun intended) point is still valid. Obviously, you also need to change "they are only cash once it has hit your bank account" into "they are only cash once it has hit your wallet/purse".

(Technically, exactly the same can be said about paper money, too, with "they are only cash once you have it in gold/silver coins".)

(All that said, I agree with you - only I find it funny that you don't trust some store but trust a banking system or a government. Yes, I know that trust(private company) < trust(bank) < trust(banking system) < trust(government), but neither is 100% (or even very, very close).

> Of course, you must realize that if you substitute "entry in the bank database" for "points", your (pun intended) point is still valid.

This is quite different. Banks have strict regulations regarding how they have to handle your money.

Now, of course, the banking system could collapse, but so could the state, in which case the cash in your wallet would loose validity, too. Gold would be valid, but only as long as you have people to trade to. For most states, though, this is a far smaller risk compared to some retailer shelving their cashback system.

EDIT: Responding to your edit:

> Yes, I know that trust(private company) < trust(bank) < trust(banking system) < trust(government), but neither is 100% (or even very, very close).

You are right, but reasonable trust in some unregulated cashback system of a private company is orders of magnitude smaller than the reasonable consumer trust in a bank (assuming we're talking about a stable country).

> You are right, but reasonable trust in some unregulated cashback system of a private company is orders of magnitude smaller than the reasonable consumer trust in a bank (assuming we're talking about a stable country).

100% agree. Just shaking my fist at clouds when I hear people calling money in the bank "cash".

In most countries, retail bank balances are insured by the government up to a pretty high threshhold[0], so `trust(bank)`, `trust(banking system)` and `trust(government)` should all be on a par, which should be vastly different from `trust(loyalty points)`/`trust(private company)` in ways that are very much obscured by your simple chain of "<"s.

[0] to the point where, if your savings exceed it, you should have the ability to make some contingency plans yourself (like using multiple banks to spread risk and increase you total insured threshhold), or be able to hire someone to advise you on such things.

Good point. Fun fact: many years ago, when I studied banking, I had a class on these "deposit insurance systems". After one of the lectures I came up to the lecturer and pointed out a weak point in the system, where a very small group of people (say, a dozen) with enough money could pretty easily destabilize the whole country-wide system. His reaction was priceless. "You're right! I never thought about it! I have to bring it up during the next meeting of the council of [the banking regulatory body in my country]!" (He was a member of that body.) After a while of chatting I told him that I also study mathematics. This led to the strangest compliment I've ever heard: "You know, many of those famous fraudsters were mathematicians!" ;-)

Giftcards are not cash either!

Unless there is an obvious incentive to purchase a giftcard -- critically for a store/vendor which you already have near-term plans to spend money at -- then avoid them. Eg. I recently purchased one which had an effective 20% savings due to some holiday promotion and will be done spending the balance some time next week. Even then I barely decided to do so.

I don't know how we got conned into trading our money for giftcard balances at par.

When I was a child in Britain I'd usually get at least one 'Book Token' gift at each birthday, whether from a friend or relative.

It ensured I bought a book with the £5 they sent, and it was redeemable at pretty much any bookshop, large or small — so it was relatively safe.

I see the system still exists: https://www.nationalbooktokens.com/

I'm disappointed that they're gift cards and not physical tokens.

People are perfectly happy to give other people specific gifts, which are even more constraining than gift cards. This doesn't seem that surprising.

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