You can hardly step foot into a shop or get a credit card these days without being offered some sort of loyalty reward plan. From airlines to the local coffee shop, it seems everyone wants you to carry their card and collect their stamps or points. But do these cards help you or hinder you? Do they encourage your loyalty and make you spend more money at certain stores, or are you a savvy shopper who makes the cards and rewards worthwhile for you? Here are few tips to make the reward plans work for you, rather than the other way around.
Keep an eye on credit card rates
Most credit cards now are linked to one loyalty plan or another. Frequent Flyers and Flybuys are the most popular, and there are bank specific plans too. Before signing up for one of these cards, though, ask yourself - “will I be paying off the balance each month?”. If the answer to this is a no, then you need to choose your card wisely. Most cards that are tied to a popular reward plan have a higher interest rate. So if you are spending big on the card each month to collect the reward points, make sure you have the cash to pay it off or you’ll be paying out extra in interest each month. If you just want a standard credit card, then look into the interest rates of those that don’t have rewards plans too - you may save money in the long run.
How many frequent shopper cards is too many?
Nearly every store you go to now, from the baker to the coffee shop and even the beauty parlour, will offer you some sort of frequent shopper card. If you have a nice big purse or wallet, then you could probably keep every card you are given. However, if like most of us your wallet space is limited, then how do you know which cards to keep? A good general rule of thumb is that if you like the product and the service, and will probably shop there again – then keep the card. If you don’t really like the product or service but feel bound to go back because of the card – then toss it out. Free stuff or discounts are no excuse for spending money on a poor product or service.
Should you toss reward cards altogether?
One of the safest ways to ensure you get a good deal is to vote with your feet. At the end of the day if you like to shop around and hunt for bargains, then you don’t necessarily need to collect rewards cards at all. If you really do find the lowest prices on almost everything, then you will probably save yourself money in the long run. If you’re offered a reward card at the stores you visit, you could tell them that you shop around and don’t collect the cards as you won't use them very often.
The most important thing to remember is to make the cards work for you, don’t become a slave to them. If you can see value – such as buy 5 coffees and we’ll give you the 6th for free from your local coffee haunt, then take the card if you're going to redeem the rewards. If it is reward points from a grocery store where the prices are higher anyway, then you may decide not to bother. At the end of the day, it’s all about getting value for your dollar, with or without rewards.