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If you subscribe to the philosophy that one can never really have too many Billy bookcases or Poäng chairs, IKEA has a deal for you.
The Swedish furniture retailer announced this week it has begun offering the IKEA Visa Credit Card, which allows cardholders to earn rewards at the store and on their everyday purchases. The rewards are intriguing, but not entirely impressive. The card, however, is far more problematic when it comes to redemption.
The IKEA Visa, which charges no annual fee, pays:
- 5% back in rewards on all IKEA purchases, as well as on Traemand kitchen installation and TaskRabbit at-home assembly services
- 3% back on dining, grocery and utility purchases
- 1% back on all other purchases
The return on IKEA shopping is excellent, while including utilities — described as “electric, gas (for home heating only), water, sanitary, telegraph services, television, radio and telecommunication services” — in the bonus categories is unusual. There aren’t any consumer credit cards that specifically include utilities as a bonus category, save for the AT&T Universal Savings and Rewards Mastercard (and that’s only good on AT&T service). Just make sure your utility company doesn’t charge you a convenience fee for paying with a credit card.
The other bonus categories are average, at best. You can beat the 3% back on dining by using the Chase Sapphire Reserve to pay for restaurants. The card pays 3x points on dining and travel purchases, and those points are far more valuable because the card is part of the Ultimate Rewards program. Ultimate Rewards points are worth 2.1 cents apiece, according to TPG’s most recent valuations.
You’ll also get a much better return on grocery purchases using the Blue Cash Preferred® Card from American Express, which pays 6% cash back on purchases at US supermarkets on up to $6,000 in annual spending (then 1%).
Limited Redemption Opportunities
Although the IKEA Visa acts like a cash-back card with fixed rewards values, you can’t actually redeem your rewards for cash back. They can only be used to offset the cost of purchases at the store (or its online counterpart).
You can’t even get a statement credit on previous IKEA purchases. Accumulated rewards are only good on future purchases.
Here’s how the redemption program works. You’ll earn “Reward Dollars” on all of your purchases, which will be “automatically redeemed” for a “Reward Certificate” once you earn $15 reward dollars. (You’d earn $15 reward dollars after spending $300 on IKEA purchases or $500 on groceries, for example.)
You’ll receive your certificate in your monthly billing statement 60 to 90 days after you earn it. You then have 45 days after it has been issued to use that certificate before it expires. Reward dollars not converted to certificates will expire 36 months after the date they are posted to your rewards balance.
So, really, rewards only act as a coupon for a discount on (immediate) future purchases. Further, a certificate can be used for only one purchase. Any unused value “will be forfeited.” If you buy something for $50 and have $60 worth of certificates, you’ll lose $10 in rewards during the transaction.
If you still owe money after using your certificates, you must use your IKEA Visa card to pay the balance.
The redemption rigidity makes this card a tough sell for most consumers. Unless you shop frequently at IKEA and know you’re going to be making regular purchases in the future, this probably isn’t the right card for you. And even if you are a regular IKEA customer, using the card for dining or grocery purchases means you’re sacrificing both rewards-earning potential and better redemption options available on other credit cards.
With some great bonus categories, the American Express Gold Card has a lot going for it. The card offers 4x points at US restaurants, at US supermarkets (up to $25,000; then 1x), and 3x points on flights booked directly with airlines or through amextravel.com. It is currently offering a welcome bonus of 35,000 bonus points after you spend $2,000 in the first three months.
- Earn 35,000 Membership Rewards® Points after you spend $2,000 on eligible purchases with your new Card within the first 3 months.
- Earn 4X Membership Rewards® points at U.S. restaurants. Earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X).
- Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
- Earn up to $10 in statement credits monthly when you pay with The Gold Card at Grubhub, Seamless, The Cheesecake Factory, Shake Shack, and Ruth's Chris Steak House. This is an annual savings of up to $120. Enrollment required.
- $100 Airline Fee Credit: up to $100 in statement credits per calendar year for incidental fees at one selected qualifying airline.
- Choose to carry a balance with interest on eligible charges of $100 or more.
- No Foreign Transaction Fees.
- Annual Fee is $250.
- Terms apply.
- See Rates & Fees