Wednesday, February 18, 2009

Stop With the Loyalty Cards

Today I was at a clothing store I never shop at dispensing with a gift certificate. I was asked if I wanted to sign up for the new loyalty program. It's free and it's forever! It only requires me to spend a ridiculous sum of money at this niche store before getting a reward too small to purchase anything in the store!

I don't want to carry around a wallet full of plastic cards worth fractions of a dollar. I don't ever want to spend $200 in this store. And I don't want to give you my personal information so you can mail me "offers."

I belong to three loyalty programs: Airmiles, Chapters-Indigo (books), and Shoppers Optimum (drugstore). I'm phasing out all three this Spring.

Chapters has an upfront cost and was to offset entertainment purchases this year. I won't renew because it was too much work to utilize the card and it encouraged me to spend more.

Airmiles is linked to my banking and credit use; I'm switching to a card with cash back instead because it yields better rewards (and pays out automatically).

Shoppers has been useful but the program requires monitoring sales and planning shopping trips (at a regular rate, the plan requires spending $350 to earn $5 off)
Although the privacy factor is concerning, it's actually the life-clutter that's most annoying.

Living a pedestrian lifestyle, I plan errands strategically. I need to leave the house with everything necessary to get something done, from reusable bags to coupons and cash, and usually gear for some other random activity (like, oh, my job). Rewards Cards are one more thing to think about when I'm deciding to make a purchase.

It requires energy to navigate the system and make sure the Loyalty Program is giving me a fair trade: does it require me to buy more than I need? Have they raised the prices to account for the cost of the rewards? Does it entice me to try/buy something I don't really want or need? In my experience (and from the hard math), what you see is often not what you get.

In 2008, I collected $300+ in rewards. The breakdown: three years of collecting Airmiles passively yielded about $120 in gift certificates. Moderate use of a cash back card earned me $20 in six months. My Shoppers Card cashed out for $175 total. However, what was actually earned exclusively in that year was more like $100, where the rest was just claiming rewards I had abandoned due to a slow accumulation process. The process of earning that $100 included monitoring flyers and shopping on specific days as well as keeping a track of what I needed and delaying certain purchases to wait for a Customer Appreciation event; significant inconvenience in the name of saving $100. Any time you purchase something on impulse while there, pay more, or stock up on something rarely used it depreciates from the $100. So, if rewards programs really yield a sum of zero for paying so much attention to the Loyalty retailer, there may be serious advantages in avoiding them completely and just monitoring retailers who discount.

Someone may come up with an offer I can't refuse next year, but for the time being, I'm cutting up the cards.

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