Loyalty programs are everywhere, it seems like every company has one these days.  Our wallets and purses are bursting at the seams with plastic cards and mini-cards attached to our key chains.  94% of Canadians are a member of at least one program.

If we’re all members of loyalty programs, that must mean they’re good for our finances, right?  I mean, companies are always offering their loyal customers the best deals, right?

Related: Are Rewards Cards Costing You Money?

Loyalty Programs: Who Profits?

To answer these questions, let’s get one thing straight; companies are in business to make money.  Companies will always position their loyalty programs as being beneficial to customers, but at the end of the day the loyalty programs are there to benefit the company.

In order to truly benefit from loyalty programs we need to understand them and how consumer psychology works.

Related: 4 Financial Lessons We’ve Learned From Traveling

Loyalty programs provide a reward system by allowing us to collect points, receive discounts or get cash back.  Who doesn’t like getting points and discounts?!

Companies know that since we like being rewarded we are more likely to frequent a store or buy a product that is associated with one.  These rewards funnel us towards certain products which may or may not be right for us.  From a financial perspective, we might not be getting the best price available.

To illustrate here are a couple of scenarios involving loyalty programs I’m a member of.


One of the most common loyalty programs out there, Aeroplan lets you earn points by flying with Air Canada or United.  There are lots of other ways to collect and use points, but I’m just going to focus on this scenario for this post.

How you can benefit: In order to truly benefit from the program financially, you should only fly with Air Canada or United and earn points when they are the cheapest or most convenient option available.

This way you get the lowest fare and points at the same time.  I have flown many times and very rarely are either of these airlines the least expensive option.

Related: Aeroplan Rewards – What Is The Best Value For Your Miles?

How the company benefits: If those two airlines aren’t the cheapest option and you fly with them because of the rewards program you are incurring more cost.  These airlines then get a customer they otherwise wouldn’t have.  Chances are the points you earn by flying are not worth the added cost incurred.

Shoppers Drug Mart

Shoppers has a pretty standard tiered points based system where you earn points with purchases.  The more you spend, the more points you get.

How you can benefit: The thing that’s great about Shoppers is they are everywhere and have a huge selection of products.  If you’re shopping with them frequently because it’s most convenient, you’re benefiting from their sheer number of stores.  When collecting points, only redeem them once you have reached the top tier.

Related: Shoppers Optimum Program Review

How the company benefits: If a Shoppers Drug Mart and a Pharma Plus are beside each other and you choose to go to Shoppers just because of the program, the company is getting a customer it might not have.  Pharma Plus may actually have lower prices.

At the checkout, staff at Shoppers will ask you if you want to redeem your points.  Many people will just say “sure” not realizing that it’s a tiered program and your rewards improve the higher you get.  By redeeming your points on a regular basis you will never reach the top reward tier and be able to achieve maximum benefit.


GNC is a health food chain that gives large discounts to members on multivitamins and other supplements.

How you can benefit: If you need to make an impulse buy, GNC is a great option due to the number of stores they have in convenient locations.  As long as you only buy 1-2 items, their prices are ok.  Prices for members are much lower than non-members.

How the company benefits: The markup on supplements is staggering, so the more products you buy the more GNC makes.  By visiting the store you give sales staff the opportunity to upsell you on more products that you may not need.

In order to really save money on supplements, first buy the product in a store like GNC and try it out.  If it meets your needs make subsequent purchases online where prices are far more reasonable.

Credit Cards

While many people might not think of credit cards as loyalty programs, they certainly are!

How you can benefit: The best way to make a points or cash back credit card work for you is to never carry a balance.  Any small rewards are negated by interest payments.  Always use the same card for all purchases to maximize rewards.  Cash back cards are far superior to points cards since there are no hurdles to claiming rewards.  Cash is king!

Related: Best Credit Cards For Travel Rewards

How the company benefits: Consumers may make more purchases and take on more debt.  You may have to pay extra to transfer or top-up points in order to earn certain rewards.  If there is an annual fee associated with the card and your spending does not reach the breakeven point, the credit card company profits. If there is a fee, do the math and figure out what this breakeven point is before you get the card.

Related: Best No-Fee Cash Back Credit Cards In Canada

Loyalty programs can be great and they do provide additional value to the consumer but just remember that the programs are in place to benefit the company first and the consumer second.

Andrew Martin is a personal finance and investing blogger from Toronto, Ontario with a background in technology and a passion for travel.  His blog, She Thinks I’m Cheap aims to help Canadians make more money by sharing facts, stories and advice.

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