BUSINESS
02/08/2017 12:58 pm ET Updated Feb 09, 2018

Make the Most of Your Rewards Program Membership

I'm often intrigued and sometimes inspired by stories of people traveling the world using points and miles. There's a well-known (within certain circles, at least) man who earned over a million airline miles by purchasing more than $3,000 worth of pudding during a special promotion in 1999. Or, you might have heard about people using coupons during a grocery store's membership-only sale to get food and household products for free.

While I might not be as enthusiastic as some world travelers, or as extreme as some couponers, I do see the benefit in a program that's free to join and offers you potentially money-saving perks. However, I also know it's important not to get so caught up that I wind up spending more money than I would otherwise.

The perks of membership. There are a variety of loyalty or rewards programs available including ones at grocery stores, big box retailers, airlines, hotels, rental car agencies, restaurants and e-commerce stores. However, the benefits and rules of each program can vary.

Joining a grocer's program might make you eligible for in-store savings, exclusive coupons and rewards that could save you money at a partnered gas stations later. Online and brick-and-mortar retailers sometimes offer free gifts, like sample-size products on your birthday. Members might also be able to earn points and redeem them for store credit later.

Many travel companies let members earn points or miles when they travel, and members can redeem them for free trips or upgrades later. Travel rewards programs also often have tiers, different levels of membership depending on how often you travel or how much you spend during the year. However, even the basic tier could offer perks.

For example, some hotel loyalty programs offer discounted rates and free Wi-Fi to anyone who joins the program. Higher tiers can offer more exclusive benefits, such as free room upgrades (including to coveted suites), bonus points during your stay and guaranteed early check-in and late check-out.

Recognize why companies might have rewards programs. Whether you're signed up for the buy-nine-get-one-free program at a local sandwich shop or part of an international organization's intricate multi-tiered program, the company's goal is often the same -- create repeat customers who will shop more often, and perhaps spend more money, at the business.

When you're a big fan of a company or product, getting rewarded for your loyalty can be great. After all, it's a free perk if you were going to make the purchase anyway. But try not to get too attached to a particular company or product based solely on the rewards program.

Buying something simply because you get a discount as a member, or making a purchase "for the points," might be a waste. You could find yourself with a pantry full of products that are slowly going bad, or paying more for a trip because you didn't comparison shop the offerings from other airlines or hotel chains.

Joining a rewards program could lead to overspending if you're not careful.
Recognizing that the programs could be designed to get you to spend more, and more often, can help you refrain from overspending. Here are a few additional ways to make sure you maximize the benefits of the programs.

Don't double-count your savings. You're tricking yourself if you consider the rewards points from a retailer's program as savings when making a purchase and then consider the same points as savings (again) when you redeem them for store credit. Instead, decide when you'll "count" the rewards and stay consistent. Or, don't make the rewards part of your buying decision at all.
Keep your programs organized. The points in some programs expire if you don't use them within a specified period. But keeping track of every program you've joined can be difficult. You could use a website, app or spreadsheet to help track your accounts, how many points or miles you've earned and when they expire. There are also apps where you can add your loyalty number and quickly pull it up on your phone later instead of digging for a card or keyring.

Another way to avoid overspending is to consider your net cost when comparison shopping. To do this, you'll need to calculate how much value you receive from different rewards programs. However, some rewards programs can be difficult to compare. For example, you might find that it takes several thousand points to book a hotel room with one program and tens of thousands for an equivalent room from a different chain.

Avoid potential confusion, and the resulting overvaluing or undervaluing of the rewards you're accruing, by creating a list of the dollar value of each programs' rewards points. You could take a shortcut and copy the values that bloggers and online groups of rewards program enthusiasts place on each program's points based on previous redemptions. Or, you could make estimates of your own based on trips or purchases you regularly make.

Now you'll know when 1,000 points are worth $1 or $10 and can plan your purchases accordingly. In the end, you want to be able to make as close to an apples-to-apples comparison as possible, inclusive of the value you place on the rewards.

Bottom line: Consumer rewards programs offer a wide variety of benefits, including exclusive savings and complimentary perks. While it's often free to join the programs, and you could get rewarded for doing so, keep the big picture in mind and be careful about letting your membership lead to unnecessary purchases.


Nathaniel Sillin directs Visa's financial education programs. To follow Practical Money Skills on Twitter: www.twitter.com/PracticalMoney

This article is intended to provide general information and should not be considered legal, tax or financial advice. It's always a good idea to consult a legal, tax or financial advisor for specific information on how certain laws apply to you and about your individual financial situation.