Do loyalty programs make you spend more?

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Canada’s best cash back credit cards
WATCH: Canada's best cash-back credit cards. Did yours make the list? – Mar 16, 2018

Canadians are famous for their love of discounts, bargains and rewards programs.

According to the Colloquy Loyalty Census, one of the best-known studies of loyalty programs out there, Canadians hold some 175 million reward memberships. That works out to nearly six memberships for every adult Canadian.

READ MORE: Esso drops Aeroplan as it picks up Loblaw’s PC Optimum, Esso Extra to continue

The U.S. dwarfs Canada in terms of the sheer number of loyalty programs, but not “the degree of loyalty,” notes the Colloquy report. And while U.S. memberships grew by only 15 per cent between 2014 and 2016, Canada’s soared by 35 per cent.

But is Canada’s love of loyalty points justified? Do reward programs actually help you save or lead you to spend more?

“Justifying spending a little extra just to get points can add up to a lot of debt,” writes the Credit Counselling Society. “In fact, many people routinely spend up to 15 per cent more on purchases when they shop with a reward credit card rather than with cash.”

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Even if you use a simple points card that isn’t a credit card, it’s easy to end up buying things you don’t need just so you can reach the next reward level.

Reward programs are good business for the companies that offer them. You can rest assured that they’ve done their math and concluded that giving you points benefits their bottom line. Here are some tips to make sure their gain isn’t your loss:

Cash-back credit cards are the easiest way to save on points

How you collect points is a matter of personality, said Matthew Lau, editor in chief of Pointshogger. He loves studying the fine print of various reward programs and figuring out the best strategy to make the most of them.

“If it’s too easy, it’s not fun,” he told Global News.

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For those at the opposite end of that spectrum, though, the easiest way to save with points is to sign up for a cash-back credit card. These programs, which are becoming increasingly popular, usually let you earn for every dollar you spend. The reward, as the name implies, is cash, which you can use as you want. Although with many cards, certain purchases get you bonus points, you’re guaranteed to save no matter how you shop.

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Just make the rewards card your primary one and pay your credit card bill in full every month, said Patrick Sojka of

Canada’s best credit cards in this category let you earn between 1 per cent and 2 per cent cash back on regular purchases and more through so-called category bonuses, according to RewardsCanada’s online ranking.



Sign up for programs that let you earn for everyday expenses

“Identify your spending patterns and sign up for programs that fit that,” Lau said.

READ MORE: Here are the winners and losers in the PC Optimum merger

For example, if you commute to work by car every day and live next to an Esso station, you should look into reward programs that let you earn points every time you fill up. (For reference, Canadians got the news this week that Esso is ending its partnership with Aeroplan and teaming up with Loblaw’s new PC Optimum program.)

Sometimes, you’ll need a trial run to figure out whether a reward program is worth it for you, Sojka said.

Say, for example, that you live close to two grocery stores. You could try buying 20 of the same items at each of them to figure out which offers the best reward program, Sojka said.

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And keep in mind that shopping at a discount supermarket with no reward membership may save you more money than getting your groceries at a more upscale store with a generous loyalty program.

WATCH: Here’s the cost of groceries for an average Canadian family

Click to play video: '$220 per week: That’s the cost of groceries for an average Canadian family'
$220 per week: That’s the cost of groceries for an average Canadian family

Try to take advantage of bonus promotions but don’t go out of your way

Both Lau and Sojka advise against drastically modifying your shopping behaviour to take advantage of bonus points or reach the next reward level.

READ MORE: How much does a week of groceries cost in Canada? We crunched the numbers

If your gas station card has a promotion that lets you earn $1 for every $20 you pump, consider changing how often you fill up to maximize your rewards, Lau said. But if the same card offers bonus points for buying a soda at the station, it’s probably not worth it.

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And, likely, neither is driving several extra miles to get gas at a station that’s out of your way, no matter how tantalizing its reward program, he added.

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Collect with a purpose

If you enjoy collecting points, make sure you have a purpose. Having a goal in mind will help you pick a program with rewards you actually use.

“And once you reach your goal, cash out,” Lau said.

Aimlessly hoarding points exposes you to the risk of rule changes and devaluations.

WATCH: Ontario bans expiration of reward points, with exceptions

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Ontario bans expiration of reward points, with exceptions

Make your rewards part of your budget

Once you’ve mastered both the earning and cashing out, you can make reward programs part of your financial planning, Sojka said.

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For example, if your vacation budget is $3,000 and you have $300 worth of points to use toward air travel, you can boost your trip’s expenses by that amount.

“That might get you a bigger rental car or a room at a hotel closer to the beach,” Sojka noted.

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