How to Spend Money Wisely » Loyalty Rewards

Reward Points, Loyalty Cards, and Lies

It often amazes me to what lengths companies will go to in order to sell me their product. Whether it is a Sham-Wow, a Toyota Prius or a mutual fund, large corporations will do everything in their power to get my money. I see this everyday, from billboards to television commercials, from product placement to “viral videos”, everybody wants a chunk of my change. The scariest form of this attempt for attention are the deceptive schemes that look like they are good for the consumer, but are actually beneficial for the company.

Why Are Reward Programs Offered?

I think reward points, or loyalty cards, are the type of thing that companies do in order for us to give them our business while pretending like they are doing us a favour. “Shop with us” they say, “and we’ll give you back some of your money!” These systems look good on the surface. Shop at Save-On Foods, get Save-On Points, redeem for discounts on products or prizes. Shop with a Costco Mastercard, get 1% back on all your purchases. Looks good? Sounds good? Well, they can be, but they are also only in existence because the company is making a profit off of it. It the program lost the business money, then the business simply wouldn’t do it. There’s always a catch, there’s always some other reason that the company is implementing a reward program. It isn’t for your benefit, it is for theirs.

However, there are still some good rewards programs out there. The good programs are ones where both the business and the customer benefit. Take my MBNA Smart Cash Mastercard, for example. They give me back at least 1% on all my purchases, as much as 5%, in cash. I win, because I get some of my money back, but Mastercard also wins because I used my card more often, and they make money every time I use that card. The bad programs are the ones where there is little, or no, tangible benefit to the consumer, while the evil ones are where the business waits until there are too many “points” in existence, and as such, simply makes them worth less.

Make the Rewards Work for You

But as long as you’re already going to the store, you might as well sign up for the rewards program – as long as it is free to join and participate. And over the years, you might build up a few points here and there. But what do you do with them? When I was growing up, some parents of a friend of mine managed to buy an entire home theater system with the reward points that they had earned, but it took years and years of purchases, and it took a transfer from one type of points to another in order to get them all at the same place, where they could be used more effectively. My wife, on the other hand, would much rather use a few points here and there to save a dollar or two off of our regular purchases. And why not, she argues, as we’re never going to save enough to buy anything worthwhile.

I wondered which way was better, so I decided to figure it out. I guess it would have to be context specific, as certain prizes or cash returns would be better or worse than others, so you would constantly have to keep yourself abreast of the “going rate” for cashing in on your rewards, but the general principle should be relatively easy to figure out. If I were to determine which way was the best, I would simply go through the catalogue of rewards (if your program has one), and figure out what prizes I would want to get. If there was nothing worth getting, then there’s nothing worth saving for, so you might as well trade them in for cash or discounts at the register. If there are an item or two worth saving for, then figure out its market value, and translate that into the points system.

For example, if you wanted a Nintendo Wii, and it cost 420 points to redeem, or $210 in store, then you would simply have to determine in store if any discount was worth more or less than the ratio presented by the Nintendo Wii. In this easy example, the worth of the points are approximately fifty cents each, and as such, you would have to earn back fifty cents for each point you redeem. If it costs 5 points to save a dollar off ice cream, then save your points towards the Wii. If it costs 2 points to save 3 dollars, then by all means, redeem them for the discount.

For the most part, I find reward systems too complicated and not rewarding enough to be worth the time and effort required to get anything worthwhile out of them. It seems like you need to spend thousands upon thousands of dollars at a single store in order to earn something worth a couple of bucks. Unless you find cash back reward programs, then they honestly don’t seem worth it.

What rewards systems do you have? Are they worth it? How do you use your reward points?


  1. Bruce K

    I hated how many loyalty cards I ended up with over the years so now the only card I carry around is my Save-On card (and its actually the key-tag). Without it you can definitely get hosed, as they don’t take phone numbers like Safeway.

    I’ve memorized my AirMiles card number, but that’s a program I don’t go out of my way at all to use. I have an Aeroplan Visa as well, but since I stopped using my credit card I noticed its not worth the yearly fee.

    The one loyalty program that works well for me is FasGas litre log. Luckily for me I’m using the company fuel card, and usually get back about $30 a month.

    Love the blog, been spending a lot of time reading on it. Thanks!

    • Tom Drake

      Bruce, thanks for the kind words! I probably have too many loyalty cards. All I really use are Sobeys (points card and credit card) and my executive membership at Costco. I have been a big fan of Petro Points for about 12 years but the Costco near me recently opened their own gas station so I’m filling up there now.

  2. Ray

    Great blog. I go for free CC to start, one for general use (PC mastercard 1% back), and one for gas (Petro mastercard 2cents per litre) After that it gets tougher to remember bringing all the reward memberships for double dip. Airmiles, aeroplan, HBC, sears, optimum, Petro points, esso points..i do it all.

    Since I moved and with only Esso nearby, I started looking for another gas card. 2cent back was also good when gas was <$1, bu now it's diminish returns.

    I settled on Costco's true earning AE. It has 2% gas back, 3% on restaurants (any food outlet that accepts AE, even fast food) and 1% anything else. Problem is a lot of places don't take AE, so I still carry PC master just in case. I do make an effort to shop at Costco and get extra 2% back as executive member. They claimed if I don't earn enough with the 2%, Costco would refund the difference to me for the amount between the basic and exec membership.

    Finally, I find it impossible to evaluate the points value. I see folks going crazy for the 20x points days at SDM and bonus redemption days there. But they inflate the prices for those days or at least remove discounts making me think twice about leveraging any of that. So for most points, I see it as bonus only. A few giftcars from Airmiles, car wash from gas, that's about the only consistent rewards I get.


    • Tom Drake

      Thanks Ray, sounds like you know how to play the points game! Like you mentioned with Shoppers, as long as you’re not going out of your way to collect points then the points are nice. If you’re paying more just to get extra points, then it’s a bit of a ripoff.

  3. Roshawn @ Watson Inc

    I decided a while ago that the “loyalty” points are often not worth the trouble for me. If you make a mistake (i.e. be 1 hour late on a payment), they stick you with a $40 late fee. Where is their loyalty? No thank you.

  4. FinEngr


    Globally, you are right. The programs aren’t really worth it because you only receive a fraction of the costs back – sort of like tax credits.

    However, recently writing about “asset aggregation” (*see notes below), it can be worthwhile if you’re concentrating your efforts and, most importantly, if THIS IS MONEY YOU’RE GOING TO SPEND ANYWAY.

    If the program forces you to spend more than you intended, the rewards are not worth the added cost.

    * Wish I would have known about it last night while drafting the guest post for Evan @ My Journey to Millions. It should appear Thurs and I’ll see if I can get a link added in back here.

  5. Alex

    Well Alan, would you rather they tell you: “PLEASE Sir, give us your money!”
    You should NEVER buy something just because of reward points. Normally, you will spend $50,000 to get 5,000 points to get an item with a “value” of $500 which cost the store $200. Stores also add the cost of the program onto the goods they sell. I find Shoppers is often more expensive than Wal-Mart for the same item.
    I, too, have a cashback MC which I pay off every month.

  6. Kevin@OutOfYourRut

    I have to agree with the point FinEngr made, no rewards plan is worth if it will cause you to spend more money than you ordinarily would. There’s really no way to measure this objectively either.

    My guess is that if you were on the fence about whether or not you “needed” something, the rewards bonus would in some way influence your decision on the buy side.

    Logically, the more we buy with a card, the more the creditor is making. It’s in their business interest to get us to buy as much as possible. That can be properly managed, but I’m not at all comfortable with the fact that a vendor I do business with regularly is rooting on or facilitating my spending.

    I can do a fine job of that all by myself!!!

  7. JoeTaxpayer

    I have a Mastercard that gives a 2% cash rebate into a Fidelity 529 college savings account. This account currently is worth about $7,000. This card has no annual fee.
    I also have an American Express Open card that gives 5% cash back at Office supply stores and 3% on Gas. Also 5% in select categories, one of which is a hotel my wife stays at when traveling on business. Also no annual fee. The cash back is a credit that appears on the bill, no effort at all.

  8. youngandthrifty


    Do you think that guy who does the Shamwow or the Slap Chop is on crack? He kind of looks like it!

    I have to admit, I’m kind of a points and loyalty program addict..

    The one that is really a rip off is Choices (don’t know if they have it out east?) but you have to spend a gazillion dollars just to have $25 to spend in the store…

  9. Mr. Not Made of Money

    I enjoyed your post. We have a card that pays points but have redeem it maybe once or twice. The cash reward programs sound the best to me. Thanks!

  10. Geoff Mayo

    What everybody seems to miss in these comments is that the whole rewards industry that has grown over the years like a cancer is totally parasitic – ie non-productive, unnecessary and feeding itself
    on we the consumers.
    Why can we not just pay for what we get?
    The worst thing is, that if you do not participate in these devices, you will be losing out.
    How many man-hours per annum are lost at the checkout with “do you have airmiles sir”
    scratch scrath, ping-ping, “heres your card Sir” etc?

    and put these parasites It would make a whole slew of people away with all these

  11. Sarah

    I really like the Club Sobeys points. We live 2 blocks from a Sobey’s and a Safeway and I have both points cards as well as airmiles, but Safeway just costs too darn much. We don’t go out of our way to earn extra points, but we have seen plenty of extra points offers on products that are on sale, that I have coupons for and that we buy regularly anyways. I go to the store only to buy really great deals, and occasionally forgotten or replacement items (milk and eggs) from our regular superstore stock up trip. In the 19 months that I have had it, I have earned $150 in free grocerys,

  12. Bryan Jaskolka

    I really like the new PC Optimum. I’m at the grocery store, I typically go to the same one every time, and it’s money I’m going to spend anyway. Best of all, they’ve set it up in a way that actually does benefit the consumer. You get points and offers are based on what you buy the most, and you do really get a lot of points. There are tons of options, and I figure – if they can make it work for both of us, then why not?

  13. Jen

    You have to get the points working for you. If you only shop and expect return you won’t find it. When we had safeway I only shopped on the 100 bonus points days. In two years I have 5 day passes to Disneyland for our family of 4 (over $1000.00 value). That is just doing some basic shopping on those days.

    Save On has been good since they opened offering bonus points to entice people in. In just a few months I have redeemed about $60 in savings for BC Ferries and am close to getting a $250.00 gift card.

    I spend $100 easily in a shop so doing it only when they offer bonus points is worth it to me.

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