How to benefit from loyalty programs

Recent statistics show that Canadians love their loyalty programs. If used correctly, rewards programs can actually be a useful tool in helping your household budget go a little further.

A recent survey from TD Bank revealed:

  • 72 per cent of Canadians say they participate in loyalty programs, carryiloyalty programsng at least one card with those benefits
  • 82 per cent of respondents say  rewards points are a selling feature when choosing a card
  • 49 per cent of respondents indicate  they actually arrange their shopping around stores where they will accumulate points

In order to reap the full benefits  of loyalty programs, you have to be committed as well as informed about how programs work. You have to employ a little strategy as well.

“Loyalty programs, when used strategically, can help you receive free products, services, discounts and other perks. However, you have to know what you are doing,” said Jeff Schwartz, executive director, Consolidated Credit Counseling Services of Canada.

“Many rewards programs are attached to credit cards to encourage you to spend more. However it is never a good idea to go on a shopping spree so you can get extra points. Watch your budget and stay within that limit.”

Buyer beware

Many credit cards offer apparently lucrative rewards points that you can cash in for merchandise or prizes, which often includes a bonus for signing up.

Keep in mind that the road to debt disaster is paved with good intentions. Even if you open up a card to get points, but say you’ll never use it, or that you’ll close it after you’ve used the points, most people don’t. The best way to avoid a debt problem is to self-limit your credit. Opening up extra cards, no matter what the motivation, is not going to help.

Read the fine print

Find out about the rewards before you join a loyalty program. Are there fees? Do reward points expire after a certain amount of time? Are you able to pool points with your spouse? Are there blackout dates for use? Are prices for things like flight and hotels comparable to other booking engines, or are you paying a premium for using a rewards program?

To really determine the financial benefit, you have to anticipate all of the costs and/or your ability to actually redeem points.


Other kind of rewards

If you are keen on the idea of rewards programs, why not participate in ones that reward you for shopping at a certain store, rather than those associated with credit use? Many chain or in-store rewards let shoppers accumulate points to redeem for discounts on everyday items, like groceries or household products, which can actually give your budget a boost. Make sure that you are buying an item based on its price and your need for it, not just to get the points.

There are other ways to utilize rewards. Do you belong to any associations (like the CAA or workplace industry associations)? Very often a benefit of membership is discounts on merchandise and travel, which rewards you as well.

Are you looking for ways to use your credit wisely to improve your financial situation, rather than loading up on debt? To get a plan in place, call one of our trained credit counsellors [PHONE _NUMBER] or check out our free online debt analysis 

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