Pros and Cons of Store Loyalty Programs

Loyalty Programs
Loyalty programs may cost you more than they save. It is true that store loyalty programs and loyalty points on credit cards can offer up some great deals and even freebies but is it worth it? At what cost is that deal or freebie coming to you? There are a lot of perks when it comes to loyalty programs but there are a number of cons as well.

What is a Loyalty Program?

A loyalty program is a program designed to reward a company’s most loyal customers. For instance, if you shop at one specific grocery store all the time they may ask for your phone number. Once the computer recognizes you (if you’ve signed up for their loyalty program) it will take off additional money and coupons for being a regular customer.

Different Kinds of Loyalty Programs

Not all loyalty programs are made the same though. There are many different types of perks for being a loyal customer. Here is a break down of the most common loyalty programs:

  • Grocery Store Loyalty Programs: Many grocery stores (and retail stores) have loyalty programs available for customers. Usually you set these up using your email address or phone number and instantly start saving. You get marked down prices and most loyalty programs like this also offer great coupons.
  • Credit Card Rewards: Credit card loyalty programs are a bit different. Credit card companies don’t offer you discounts for using their credit card. Instead, many companies have begun offering cash back rewards or flight miles. This keeps their most loyal customers using their credit cards for more points.
  • Member Rewards: If you shop at a store like Costco you know all about member rewards. To shop at Costco you have to be a member but once you pay the $60 fee the savings are non stop.
  • Online Shopping Loyalty Programs: Online shoppers get some of the best loyalty programs. If you’re a regular shopper at a virtual store they will send you coupons, discounts and deals regularly to your inbox.
  • Shopper-Specific Deals: If you join a loyalty program you may also get some specific deals based on what you buy. For example, I purchase wine at my local grocer and use my rewards program. Every once in a while they send me a “20% off a case” coupon because I frequent the store for that so often.

So, loyalty programs sound like they are pretty great and they are. Each program can help you save money, get money back or score great deals on stuff you’re already buying. What is the downside?

Cons of Loyalty Programs

Loyalty programs sound great and they are, for the most part. There are some downsides to signing up though. The biggest downside of them all is that many people actually end up spending way more money than they need to to get credit card points or coupons.

Signing up for a loyalty program can be a great idea as long as you’re continuing to shop smart and stick to your budget. Have you ever signed up for a loyalty program? What was your experience?

Photo: Corelynx

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