Boomers And Promo Cards: Spend-Spend-Spend Or Not?

Akins says he definitely discusses these cards and programs with clients.

His purpose is not to get clients to stop using the cards, but rather to make clients more aware of their full financial picture. It's part of the client education process, he says. Such discussions do not generate revenues, he allows, but they do help clients sort things out. "When you help people, you earn their trust," he says. As a side benefit, "you get referrals and more business than you can handle."

Conversations about this with clients who have money probably doesn't make much sense, advises Carroll Busher, an agent with Financial Care Services, Kenwood, Mich. "That's because it won't affect them financially."

But do discuss it with boomers who are in financial difficulty, he suggests. Such clients may see discount cards and programs as plusses without realizing the full consequences, he explains.

For example, some people who are strapped for cash try to cobble together medical, dental and vision discount programs, in an attempt to self-insure or fill in gaps in their employer-sponsored medical plan, he says. "A better approach would be to evaluate whether the boomer is likely to use the programs."

Advisors can help with that evaluation, he says. And they can also help by exploring the consequences of doing something else with the money–say, putting it into savings at 5% interest or using it to bump up an existing employee benefit plan, he adds.

Client education about all this is necessary, says Akins, because many boomers seem to pay little or no attention to what they have.

"For instance, some cards give reward points, but they also charge a monthly fee," Akins says. If the fee shows up in the boomer's monthly bank statement, some boomers overlook the amount, he says. Or, if the card was offered by a bank, some boomers just keep paying the fee rather than analyze it–"because they have a high degree of confidence in the sponsoring employer or bank."

Akins ties this buy-it-and-forget-it tendency to the fact that boomers have been commercially trained to buy. The purchase or acquisition of promo cards occurs because it fits in with boomers' "buy today, use tomorrow" lifestyle, he says.

Some boomers are financially savvy by nature, saving money as a matter of course, notes Busher. But others are not naturally given to saving–they're natural spenders.

"The spenders need to be taught to stop and think: Is this card or program a temptation to buy or does it involve something I will buy anyway?" he says.

Another issue is that "you really don't know if you get full disclosure of the offers," says Larry Schneider, principal of Disability Insurance Resource Center, Albuquerque, N.M.

For instance, a boomer may sign up for a rewards program that accumulates points indefinitely, only to find out later on that the program has changed its policy and now puts expiration dates on the points. Was the consumer notified about this and if so, how? Schneider asks.

A good strategy is to evaluate the cards and programs by using two financial planning basics, suggests Busher. "First ask how to reduce existing costs and expenses, and then look at how to increase values."

Example: If a boomer is interested in travel, it makes good financial sense to sign up for credit cards or awards programs that pay people for purchases by adding frequent flyer miles to the boomer's flyer account. But if the person does not fly very often, the person might be better off buying airline tickets online, Busher says.