It seems increasingly likely that there’ll be a recession in the coming year, if we aren’t in one already. Many companies are already starting to struggle and younger tech companies in particular have had trouble in recent months getting more funding.
As a result, it wouldn’t be surprising to see more companies enter bankruptcy or just shut down completely. This can happen abruptly, so I wanted to write this post to suggest that you consider redeeming cashback that you might have sitting in various apps.
This is a recommendation to myself too. Between my wife and I, we have quite a lot of money and credits sitting in apps like Fluz, Bitmo, Drop, Dosh, Ibotta, Fetch, Upside, Bumped, Payce, etc., much of which has been earned when buying gift cards. I hadn’t realized until writing this post that we had so much spread around these apps, so I was surprised to realize our overall balances were so high when totaling them up.
Now, I’m not saying that any of these apps are in danger of closing abruptly and that you’ll lose any money you have in them, but I also can’t give a guarantee that this won’t happen either. At the very least, there’s an increased chance that this could happen with at least one of them in the near future compared to the risk over the last few years.
For example, we’ve just seen the Point debit card announce that they’ll be closing down on September 23. Due to the way it was regulated, the shutdown of Point is more orderly and customer money is safe. However, a lot of these apps aren’t regulated in the same way as financial companies and so there’s nothing stopping your earnings from disappearing if they did suddenly go bust.
The downside for some of these apps is that the only way of cashing out is by redeeming for gift cards rather than as cash. Cashing out means either redeeming for gift cards that I think I might want to use in the coming months or redeeming for high value brands that can be resold for ~90%. That’s not as ideal as redeeming for straight cash, but it could be worth redeeming for these gift cards anyway so as not risking earnings, especially if you do have any high balances with these apps.
The US is not in recession, despite what you’ll hear the talking heads say on TV. Not with the job market and other indicators of spending this strong at the moment. Are consumers pessimistic? Absolutely. But they certainly don’t seem to have pulled back on spending, if at all.
Yes, a lot of tech companies are having trouble scrounging up new funding. But this doesn’t indicate a recession, it means venture capital is being more conservative. It also indicates that these companies may be built on bad business models to begin with. Again, none of these is an indicator of recession (which is determined by a bunch of technocrats at the NBER).
You shouldn’t have a lot of cash tied up in these kinds of apps to begin with. Cash out ASAP. I redeem once I hit the redemption threshold. Always.
It depends on how you define a recession though. Most people tend to think of it as two quarters in a row of negative growth. I know it’s a little more nuanced than that, but for most people’s conventional understanding, we might be in a recession.
Agreed that tech companies having trouble gaining funding isn’t in itself a sign of a recession. My point was that because a lot of them have had trouble gaining more funding and are burning existing funding so quickly, we might see some of them abruptly run out of money without any of the consumer protections you might get with other financial accounts.
The definition of a recession is NOT (and I emphasize) two quarters of negative growth. The media loves to harp on this, but it’s incorrect. Despite what the colloquial “idea” of a recession is, like a lot of what people “believe” they know — two quarters is meaningless. It’s flat-out wrong. I don’t mean to split hairs, but it really does matter because it can become a self-fulfilling prophecy. That incorrect definition relies only on a single indicator (GDP) which comes with its own baggage. It’s an oversimplification, like saying someone is “healthy” because they have a normal blood pressure. And human beings like to oversimplify, especially when something is very technical and complex like an economy.
Here’s the actual definition of a recession from the experts who sort through the data to actually determine if a recession has occurred:
https://www.nber.org/business-cycle-dating-procedure-frequently-asked-questions
“…a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
There is ZILCH in there about two quarters.
It’s only in retrospect that we know we experienced a recession. They can run the gamut from the financial crash of 2008 and the pandemic-induced recession of 2020, or something as mild as the tech rout of the 2000s where the average person barely noticed any impact to their daily lives.
Lol, it’s like reading the book 1984. Despite the dictionary stating we are in a technical recession, the talking heads attempt to brainwash us that we are not. The Fed’s rate raises are starting to hit the already recessionary economy and will most certainly push us into a deeper recession. The only thing holding up the current recession from being bad is the job market, but that has already been going backwards for a few months. The survey numbers from actual people and the numbers put out have been extremely off, eerily similar to 2007-2008 timeframe. If you want to change definitions in your mind go ahead, but we are most certainly in one and will continue to be in one for a little while.
There are no definitions being ‘changed’ here. There is only one definition of a recession. That said, definitions matter a lot.
If you want to throw around the term ‘recession’ casually to talk about a lower growth rate or what you’re feeling personally, feel free but that doesn’t mean that changes the definition.
@Stephen Pepper, informative article. If you have not done so, can you write an article on how to check which gift cards in bitmo have not been opened yet and how to find out the corresponding purchase dates for the gift cards which are stored in the wallet? There are instances where the same brand of gift card with the same denomination was purchased on different dates in the apps. After that, these gift cards are stored in the wallet with no information on when they were purchased. This is unlike Fluz, where we can see the purchase date for each gift card. Thanks.
I’m not aware of a way to see which cards haven’t been opened yet. You can tell which are the most recent cards for any given brand though because the most recent ones appear on the left and gradually get older as you swipe left in order to scroll to the right.
@ben Not sure about finding the exact purchase date but if I remember correctly you can tell which ones haven’t been opened yet if you don’t see Archive card as an option. I believe if it has been open that’s when Archive card shows as an option when clicking on that card.