The Truth about Loyalty Cards

Nowadays it’s very common for companies to offer loyalty rewards for their customers. Sometimes it seems that every store you enter is offering ‘bargain’ prices or other sorts of special offers – just for being a loyal customer.

But who is this loyal customer and what is a loyalty reward? And at what price does this reward come?

If the dictionary defines loyalty as ‘pledging allegiance to’ then in this instance it means that either the customer will only ever shop in that place, or the company will always reward returning customers.

And, it seems, you only have to ‘sign up’ and you’re into the program.

One of our major retail stores automatically gives me a discount every time I shop there. I’ve never asked for it, nor signed anything. They tell me it’s because I’ve “shopped there before and that means I’m a loyal customer”.

But I have a ‘best price on the day’ policy when I shop for the type of items that they sell and if I end up purchasing from them it doesn’t necessarily mean that I’m being loyal.

They don’t provide a store loyalty card and I often wonder why they don’t just lower the prices of all their stock by the 10% that they so readily seem to give everybody.

Some of the more well-known loyalty cards are provided by the airlines. If you travel a lot, it’s a great way to get discounted seats. In the race to get more people in the air – some airlines have even made provision to link your credit card to their loyalty card, thus allowing you to earn more points.

Being a regular traveler, I belong to three ‘frequent flyer’ programs. I’ve found that regardless of the company I fly with – the points and/or flights all add up to about the same reward ratio – one in ten flights are free.

Of course, you can also link your supermarket loyalty card to one of the airline loyalty programs. But have you realised that on a ‘one dollar spent for one point rewarded’ basis you will need to spend about $8,000 dollars in groceries before being eligible for a flight between Albury and Sydney?

Of course not everything is free. There are loyalty programs that ask you to pay a fee to join. (Huh? They want us to pay them to show that we’re loyal?) Sometimes you’ll need to do your sums before buying this type of rewards program.

If you have a credit card that offers a ‘rewards program’ then you should be familiar with the annual fee that you pay in order to accumulate those rewards. Once again, while it’s nice to save your points, you also have to count the true cost of the reward in real money terms.

One card, that I know well, rewards me with one point for every dollar that I spend. Sound great? Well, when I have around 15,000 reward points – I can get a toaster.

Effectively that means I’ve spent $15,000 before being rewarded with the toaster. Now, with the annual fee being only $48 I’m beginning to think that maybe I could just keep that money and buy my toaster sooner.

In this day and age while commercial competition is enormous, we’re able to make our money stretch further than ever. We’d be crazy to ‘pledge allegiance’ to one particular store or company.

But we can participate in all the free loyalty schemes available. By keeping our wits about us; we can get some truly great discounts along the way!


©   Carmel McCartin – Budget Bitch

And don’t forget – (The views expressed in this blog are the personal opinions of the author. Don’t rely on them to make financial decisions; you have to make up your own mind. If you don’t like the content – then either stop reading or send me an email)

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