How to Use Loyalty Rewards Cards Wisely

Whenever I’m offered a loyalty rewards card, my gut reaction is “no thank you,” but there are many types of store rewards cards that can save you a ton of money if used properly. There are two rules to go by in the world of loyalty rewards cards:

  1. The card must not have any fees
  2. Having the card must not change your shopping behavior
The first rule is easy to understand and live by, but the second rule is more of a grey area. It requires you to attempt to be objective about your own behavior. But it is vastly important. If having the card causes you to buy more of the product than you normally would in order to earn the discount, you’re probably losing money. Stores wouldn’t offer these rewards cards if it didn’t make them more money, so clearly a lot of people must spend more when they have these cards. Perhaps you remember the Seinfeld episode in which Elaine loses her sub card when she’s one sub away from becoming a “Submarine Captain” and earning herself a free sub and a captain’s hat. Exasperated, she says “I’ve eaten 23 bad subs, I just need one more. It’s like a long bad movie, but you want to see the end of it!” The stores are hoping you’ll be like Elaine, buying things you wouldn’t have bought otherwise because it’s a “deal.” Do not be like Elaine.
Here are a few types of bonus cards and how you should use them.
  • Store Discounts – With this type of card, you get discounts on items in the store by presenting the loyalty card to the cashier. By offering store discount cards at no charge, the store is essentially admitting to the customer that their prices are over-inflated, and even at the discounted price, they will be making money off of you. This is pretty evil, but it takes little to no effort to sign up for one, so you should be using this type of card. Just don’t let yourself be fooled into thinking the store is doing you a favor by letting you purchase their items “on sale.” I have one of these cards for Safeway.
  • Future Discounts – These types of cards accumulate points or dollars every time you shop at the store, and you can eventually redeem those points or dollars in the form of a coupon. These cards are good to have for places where you shop regularly, such as a drug store. The coupons you receive from these cards will always (in my experience) have an expiration date, so you will be incentivized to go back to the store before the coupon expires. If there is nothing you need from the store, just let the coupon expire. I have these cards for CVS and Petco. These are both good stores for this type of card because I will always need toiletries and cat food, so I will be able to use the coupons productively.
  • Buy X Get One Free – Similar to the future discount card, this is the type of card Elaine had. These are very common at order-at-the-counter restaurants. If you buy a certain number of items from the store, you’ll get one for free. These are great cards for well-priced places you go regularly. If there’s a sandwich shop that you love, but their sandwiches cost $12, so you try to limit how often you go there, you’ll need to be really honest with yourself about whether having their store card will cause you to go there more often. I have several of these cards, but I rarely go out for lunch, so I don’t use them often. I have them for a few low-cost delis, a burrito place, and a frozen yogurt shop.
  • Partner Rewards – These cards give you rewards at a business that partners with the store. The most common example of this is grocery stores offering gas rewards cards. Since you need groceries and you need gas for your car, these cards can be very useful. On my last fill up, I saved $0.40 per gallon on 17.5 gallons, which amounts to $7. I don’t save that much every time I fill up, but I had recently stocked up on a lot of freezer food. The key with these cards is to understand exactly how the savings work so you can get the most out of them. I have one of these for Lucky that offers rewards at Shell. For every $50 I spend on groceries, I get a $0.05/gal discount on up to 20 gallons of gas. The total rolls over from visit to visit, so if I spend $75 one day and $25 another day, I’ll have accumulated a $0.10 discount. Discounts do expire a month after I earn them, so I can’t just let the discount accumulate indefinitely. The biggest thing to remember here is, unless you drive so infrequently that you use less than a tank of gas per month, you should only fill up when you’re close to empty or when you need about 20 gallons if you have a bigger tank than that. If I go through two tanks per month, filling up twice allows me to accumulate two weeks of rewards before buying a tankful. Filling up every week means cashing in smaller rewards each week on a smaller amount of gas.
Do you agree with my assessments of how to use these loyalty rewards cards? Have you encountered any other type of loyalty rewards cards? 

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