Who wants deals on daily deals, discounts on already-discounted goods and services? Well, that’s in a sense what LivingSocial and Chase are offering with the new LivingSocial Credit Card.
In addition to a $30 initial bonus, the LivingSocial Card offers 5 points per dollar spent on LivingSocial purchases, 3 points per dollar on dining, and one point per dollar on everything else. For every 100 points cardholders accrue, they obtain one Deal Buck, which is just a fancy way of saying that points are redeemable at a 1% rate and only for LivingSocial purchases.
The decision to team up with LivingSocial appears to have been a no-brainer for Chase, which gains increased access to an extremely profitable consumer segment as a result of the affiliation. LivingSocial’s customers are younger, richer and better educated than Groupon’s, according to Nielsen data, with 46% of them having either a bachelor’s or a postgraduate degree, 33% being between the ages of 21 and 34, and all LivingSocial customers being 49% more likely than the average online consumer to make $150,000 annually.
The real question, however, is whether opening this card would be a lucrative proposition for these highly educated young folks. At first glance, the answer would have to be no for the simple reason that LivingSocial purchases are unlikely to represent a major expense for many people. In other words, a credit card offering attractive rewards on everyday expenses like gas or groceries would be more valuable.
Nevertheless, why don’t we see how the LivingSocial Card compares to some of the best rewards credit cards on the market?
Say, for example, you spend $200 a month on gas, $200 at restaurants, $300 at the supermarket, $200 on entertainment, and $50 on LivingSocial. Under this scenario, the LivingSocial Credit Card would net you $186 over the course of the year to use on LivingSocial.
The LivingSocial Credit Card therefore doesn’t quite measure up to the best cards in the business, which means most people shouldn’t pull the trigger in applying for it. This is especially true in light of the fact that the other two cards offer true cash back rewards, which can of course be used to purchase anything, while Deal Bucks can only be used to make purchases through LivingSocial. And while LivingSocial does offer great deals, most of the things you buy through them aren’t going to be necessities.
There is, however, a caveat to this conclusion. If you spend a lot of money on LivingSocial every month (i.e. more than $50), you could adopt the Island Approach and make the LivingSocial Credit Card a cog in a strategic credit card arsenal.
The Island Approach’s central idea is that you can compile a collection of credit card features unattainable with any single credit card by using each card for a specific type of transaction, as if this transaction is stranded on its own island.
So long story short, unless you are a LivingSocial addict and want to use this card for only your LivingSocial purchases and most likely your dining purchases as well, stay away from the LivingSocial Credit Card.