Nonsensible Incentives

A cold hard fact: people love incentives. If you dangle a carrot, someone is bound to follow. And the examples are endless because it's apparently a business model that works... at least for the company.

Exhibit A - Soda Rewards Points
Pepsi and Coke both offer codes on 2-liters, 20 ounce bottles, and 12 packs. A consumer can collect the codes, which are redeemed for points. In turn, those points are traded for free raffle entries, MP3s and various "big-ticket" items. Of course, the exchange rate is worse than the U.S. Dollar to the British Pound. Still, the thought process is that you're getting more bang for your buck with a particular soda brand, and so you keep buying that brand. Unfortunately, getting that plastic Diet Coke bank you've set your eye on will likely cost you the shirt off your back.

Exhibit B - Frequent Flyer Miles
Travel a lot? You're probably stuck with a ton of American Airlines AA Rewards, Delta Sky Miles or Continental Airlines OnePass points. As you're probably aware, the airline industry is taking a major hit thanks to skyrocketing oil prices (fuel, food, and so on). Good luck finding an airline that won't charge you an arm and a leg to use those miles. Don't worry... you can just charge the fee on your mileage accruing credit card. BONUS! Score one for you -- or not.

Exhibit C - Credit Cards
Almost every credit company offers an array of "points" or "mileage" cards. There's usually some fine print associated with them, such as when your points expire or how they can shut the program down at the snap of a finger. There may even be extra money involved with getting that plasma or LCD flat screen TV you always wanted. The good news here is that cards that require a yearly fee to enroll (such as American Express Green, Gold or Platinum) often stay on your side. The downside? Paying a yearly fee on-top of everything else when you're struggling to keep your finances together in a crashing economy.

The list goes on... and don't think the government isn't joining in on the carrot dangling fun. Enjoying those stimulus checks?

If that weren't enough, Republican presidential hopeful John McCain recently shot the incentive concept out of a cannon by offering a $300 million cash reward to whoever develops a better, environmentally friendly car battery. Double take alert: $300 MILLION???

...AND THEY'RE OFF!