MoneyWisdom Blog

7 Things to Know Before Signing up for a Store Rewards Program

Posted by Dawn Weinberger on Oct 14, 2019, 5:00:00 AM

loyalty rewards receiptIt seems like every retail transaction we make involves some sort of secondary solicitation from the cashier. Do you want to donate to the charity du jour? Save 15% on today’s purchase by opening a store credit card? Sign up for our rewards program? (By the way, it's free and only takes two minutes to sign up!)

Even if the first two questions compel a hard no for you, signing up for a store rewards program might be worth it — especially when one is offered at a store you visit frequently and you want to save some cash.

So how do you know if a rewards program is right for you? Here are 7 things you should know before signing up for a store rewards program.

1. A rewards program is not a credit card

It might be tempting to immediately turn down an offer to sign-up for a rewards program for fear that it's nothing more than another name for a high-interest credit card. But it is not the same thing.

Instead of charging you interest on your purchases like credit cards do, rewards programs allow you to gather up points as you make purchases in a particular store. Once you reach a certain spending threshold, you receive a reward in return.

For example, at Peet’s Coffee, members of their Peetnik’s Rewards program receive a free drink once they reach 15 points. Points are earned by purchasing food, beverages and other products. Bonus rewards, like discounts on whole beans, are sometimes offered as well.

Some retailers offer rebates on a quarterly basis when you spend at least $500 in that time period. Others send digital coupons to use toward a future purchase once you spend a certain amount of money. (A store I frequent, for example, sends a $10 coupon via email each time my collective purchases reach $200.)

The only way interest is involved in is if you make the point-gathering purchases on a credit card and proceed to carry a balance.

2. A loyalty program and a rewards program are not the same thing

Though the two terms are sometimes used interchangeably, loyalty programs and rewards programs have a subtle difference.

What is that difference? Well, rewards programs give discounts and incentives based on the number of purchases made or dollar amount spent and are typically free to join.

Loyalty programs, on the other hand, offer incentives to all members — regardless of their spending habits, although big spenders sometimes unlock additional benefits. Plus, they are often pay-to-pay. Examples? Amazon Prime (if you have an Amazon Prime membership, you automatically receive discounts at Whole Foods Market — even if you only shop there once in a blue moon) and Barnes & Noble.

3. The retailer is probably tracking your spending habits

It is always nice when a retailer sends you a store coupon for an item you buy regularly.

But if it bugs you that the coupon arrives only because the retailer knows what brand of laundry detergent you prefer and when you are likely to run out of it, you might want to think twice about signing up for the rewards program. That's because when you do, you are also agreeing to let them keep track of everything you buy so they can effectively market more products to you.

Some even sell your data to other retailers and agencies. Unfortunately, this is inevitable — so if you want to earn rewards, just be aware that this is happening (and don’t forget to read the fine print so you can say ‘no’ to the program if you don’t like their policies).

4. You may need to download an app

Some rewards programs hand out plastic cards or keytags; some allow you to simply enter your phone number at the check stand to get points.

Others, however, require you to download an app to your smart phone in order to access and manage benefits. So, not only are you giving the retailer your email address, phone number, and permission to track your purchases, you also have to come up with a user name and password, which you will then need to add to your password management system, and dig your phone out of your handbag or back pocket every time you want to make a purchase.

No biggie for some folks, but for you it might feel like more trouble than it's worth.

5. Your reward benefits probably expire, so use them ASAP

It has happened to me several times over — I earn a reward, but I don’t make it back to the store in time to actually use it. The reward then ceases to exist.

Because the whole goal of any rewards program is to get you to shop more, is it any wonder that stores are going to tack expiration dates to your “earnings?” Pay close attention to them so you don’t miss out!

6. Rewards go beyond rebates and coupons

While many rewards program seem to be centered around the idea of earning a coupon for X dollars off after you spend Y at the store, some include additional member perks.

Many offer birthday-month discounts, for example, or allow you to use your points to purchase exclusive products. Some regularly send emails with coupon codes not available to the general public.

You can also sign up for rewards programs that offer additional discounts on fuel above and beyond the in-store points you are collecting.

7. Believe it or not, rewards programs can save you money

If you're shopping simply for the purpose of collecting points, well, that probably isn’t going to put extra money in your pocket.

But if you use the programs strategically, you could come out ahead. This means signing up for rewards programs at the stores you visit frequently, paying close attention to the discounts and incentives they offer, and making sure the cashier scans your card or app (or enters your phone number) every single time you make a purchase.

Between rebates, coupons and fuel points it is quite possible that you will come out hundreds of dollars ahead in the course of a year.

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