The Pros and Cons of Store Loyalty Cards

You can't shop anywhere without being pitched on store loyalty cards of some kind. But are store loyalty cards really a benefit? Here are the pros and cons.At one point in your life, you’ve no doubt been standing at a cash register, checking out, only to be asked if you’d like to sign up for the store’s loyalty program.

To be clear, I’m not talking about store credit cards that you can actually put charges on, but programs that give you incentives for merely shopping at their store.

Of course, not all loyalty programs look the same. They’re presented as punch cards, where you’re given a free item after purchasing so many, or points programs, where every purchase equates to points you earn to ultimately receive rewards, or finally, cash back programs, where purchases earn you rebates to be spent on any future purchases.

Store loyalty cards often don’t cost you anything and can therefore seem appealing and harmless. However, have you ever thought about whether or not a loyalty program is actually helping you or harming you? Consider these pros and cons the next time you sign up for store loyalty cards.

Pros of Store Loyalty Cards:

1. Better Deals & Savings

Many store loyalty cards offer even more incentives than just the “points” you get from using their cards. By signing up for their program in the first place, many stores will offer members special deals and discounts, or send them special coupons through mail or e-mail, which are often exclusive to members.

Of course, the purpose of programs like these, is that after you spend so much, you earn cash or discounts to put towards your next purchase. If your program is with a shop you go to often, a rebate can help save you money you would have otherwise spent.

2. Free Merchandise

Some programs, like punch cards or those that earn you points, can earn you free merchandise. Depending on the company you may be able to earn everything from gift cards to free airline tickets or even hotel rooms depending on your accumulation of points.

Sometimes, the items you earn from loyalty programs can be significant and offset the cost it took to earn those rewards. Punch cards of course will likely earn you something small, like a free drink, sandwich, lunch, or whatever type of perishable you often buy at a restaurant, but it’s still free merchandise.

3. Cash Back

When it comes to cash back programs, it’s hard to argue the cons of receiving money back. While the rates for cash back can sometimes be low, meaning you’ll have to visit said store a few times to earn money back, most customers love earning cash. Again, as mentioned earlier, the beauty of cash back is that you can use that money towards any future purchases.

4. It’s Free and Uncomplicated

Apart from the rewards, cash, and free merchandise loyalty programs can earn you, the beauty of signing up for said programs is that they’re usually free. Furthermore, unlike store credit cards, loyalty cards are often much less complicated. They don’t require the commitment or have the potential to get you into as much trouble financially as a credit card might.

5. Better Service

While this isn’t exactly a tangible reward, the value of great service can be priceless. In some places, being a member of a companies loyalty program can equate to more efficient and better service. Since many stores use your loyalty membership as a way to track your preferences and spending habits, they sometimes use that information to cater specifically to you.

Store loyalty cards can save you money, but they can also harm your finances if you aren't careful.… Click To Tweet

Cons of Store Loyalty Cards

1. You Might Spend More

Of course, the way to earning points and rewards is through spending money in the stores and companies whose loyalty programs you belong to. That being said, if you stick to your normal spending habits and only frequent those stores like you normally would, loyalty programs aren’t a problem.

Unfortunately, many people find that in a mad rush to earn rewards quickly, they spend even more than they normally would. Many companies position discounts and deals in ways that force the customer to spend beyond their means or outside their budget just so they can take advantage of said deals.

2. Incentives Cost A Lot

While cash back and free merchandise can be great incentives, the question begs to be asked of whether they’re enough to offset the money it cost your own account. Cash back rates are often low and points aren’t often racked up easily, which means you’ll likely have to spend a hefty amount in the store to feel the rewards of your loyalty program. Hence why as good as the program sounds, it could mean not-so-great things for our finances.

Moreover, sometimes you go to cash in your points for free merchandise only to find out that it isn’t exactly free (tax-free that is) or that the company is out of the free product they’re offering.

3. Personal Information Vulnerability

Although companies having access to your information can be useful and sometimes to your advantage, most loyalty programs don’t allow you to sign up for them without forking over a good deal of personal information.

Many companies use your information to their advantage to either make money by selling your personal data or by flooding your inbox with tons of junk and spam mail tailored to your taste in order to get you to spend even more. While most people receive their fair share of junk nowadays anyway, giving away valuable information can only serve to create even more unwanted spam. Plus, it could even result in having your identity stolen or compromised.

In today’s consumer market, you’d be hard-pressed to find a store or company that isn’t pushing some sort of loyalty program. You can’t go into a grocery store, boutique, or even fast food restaurant without being given some schpeal on the great rewards you’ll receive.

Store loyalty cards can be beneficial and earn you great incentives. However, as with many contracts or programs you sign up for, it’s important to read the fine print and carefully examine what you’re agreeing to. After all, the point of signing up in the first place is because of the great deals and savings you’ll earn, not to just trick you into spending more.

What are some loyalty programs that you’ve actually found beneficial? How many do you belong to?