Do you know what those points are costing you?

Why Some Rewards Programs Don't Benefit You

by Pauline Milner

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In the past several years, rewards programs from retailers have exploded. While it seems that consumers are the beneficiaries of these programs, when you delve into the numbers, you find a different perspective.

Looking at the following reward programs when converted into real numbers, you will discover just how much you have to spend at a retailer before they give you a little incentive to keep giving them your business. Sure, some of these programs may offer additional limited coupons or extra points days for members, but even if you're willing and able to make your purchases during these promotional periods, the rewards can still come at a high cost.

Starbucks gives you two stars for every dollar you spend, and you have to load money onto their card in order to accumulate rewards. If you have up to 299 stars, you can get free refills on the same visit and a free food or beverage item on your birthday at an average cost of $2.45. After you have reached 300 stars, you can get a free beverage or food item for every 125 additional stars you earn in any 12 consecutive months. This means spending $150 to get to the 300 star mark and then spending $62.50 for the 125 stars needed. That free coffee or food item will cost you $212.50.

Walgreens will give you 100 points for every 30-day prescription and 10 points for every other dollar you spend. When you have racked up 5000 points, you can get $5 off your next purchase, but you will have spent up to $500 in the meantime.

Best Buy has three reward levels, depending on how much you spend. Points are per dollar spent and you get 0.5 points by spending up to $1499, 1 point if you spend between $1500 and $3499, and 1.25 points if you purchase over $3500 in a 12-month period. Every 400 points will get you $5 off, but you will have to spend a minimum of $320, if you are at the top level, to get the 500 cent saving off your next purchase.

Safeway will give you a point for every dollar you spend. Every 100 points will get you 10 cents off a gallon of gas at participating stations. Your points expire every other month, and you can only save a maximum of $1 off. You will have to spend $1000 to get the full benefit, but you can get the 10 cents per gallon off if you spend $100.

Petco has one of the simplest models. You get 1 point for every $1 spent and 100 points will get you $5 off. If you spend $100, you can get Fido a small rawhide bone or a couple of tennis balls.

Why Some Rewards Programs Don't Benefit You

JCPenney will give you one point for every dollar you spend if you use their credit card. Paying by any other method will only get you one point for every two dollars you spend. When you reach 200 points, you get a certificate for $10 off your next purchase. If you use their credit card, you will have to spend $200, and if you pay by another method, you will have to spend $400 for that $10 saving. Also, if you purchase four pairs of select shoes or bras within a year, you will get a $15 off coupon, but note the word "select," which means that only certain brands and styles are included in the deal. They will also send you a $10 off coupon on your birthday, so you can get that benefit just for being a member.

Kohl's gives you 1 point for every dollar you spend. Every 100 points gives you $5 off, but you have to spend $100 to get there.

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Papa John's Pizza will give you one point for every $5 you spend. You get credited for what you spend on delivery and taxes, but not tips. When you get 25 points, you get a free large three-topping pizza, but you will have to purchase $125 worth of their dough to get yours.

Intercontinental Hotels offer either 1 point for every dollar you spend or 10 points for every dollar, depending on which of the hotels in their chain you choose to stay at. You can gain points by shopping at a number of their partners. When it comes time to cash in, your card better be worn thin from use because a $50 gift card to a number of popular retailers, available from their rewards catalogue, will cost you 20,000 points. Yes, that does actually translate to spending $20,000 at one of their cheaper hotel chains unless you have racked up points by one of their other methods. Of course, if you have stayed at their higher end properties, then you will only have to spend $2000 in order to get the $50 gift card.

As demonstrated by these examples, you are probably better off shopping the sales flyers and clipping coupons in order to get those savings. When you do a little math, it is clear that most loyalty programs are designed simply to get your business and not really reward you for it either. So the next time you're tempted to spend just to earn a few rewards points, see if your loyalty would not be better served by putting that money into your emergency fund or other savings account instead. The long-term rewards will be much better than a free pizza or cup of coffee.

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