How To Profit From Loyalty Programs

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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  1. Mrs. Pop @ Planting Our Pennies on September 21, 2012 at 4:25 am

    Another one to keep an eye out for are store card programs with discounts like Target’s. Target’s RED card gives an automatic 5% discount on every purchase at Target. Great, right?
    Well, Target has a ridiculously advanced customer research department that can predict tons of consumer information about your buying habits and send very targeted (haha – unintended pun!) ads to get you to buy even more. Check out the book “The Power of Habit” for more info – I wrote a review of it on our site.
    Target’s not the only company that does this, they just happen to be very good at it.

  2. Chuck on September 21, 2012 at 5:11 am

    shoppers/Pharmaprix is one of the worst programs. They charge ~20 percent more than others and just give you back your money when you redeem points.
    Go to Jean Coutu and get Air Miles and save your 20 percent!

  3. Joe on September 21, 2012 at 6:12 am

    I find that Air Miles / Aeroplan just aren’t worth it for me. I’ve collected Miles for years and I only got a $20 grocery gift certificate (only because I shopped at the LCBO a good amount in my university days). Now they’re pushing this cash ridiculousness that devalues their points even further. I’m starting to think it’s not even worth keeping the card in my wallet. I don’t have a Shopper’s Optimum card yet my partner manages to get some actual savings from them, despite only buying milk and some OTC drugs there, thanks to their bonus days/bonus redemption days.

  4. Echo on September 21, 2012 at 7:15 am

    Great point that some of the best rewards programs are not exactly from the cheapest merchant. But you can definitely profit from loyalty programs if you pay attention to things like bonus points and redemption tiers.

    Finally, if you don’t want to carry all these cards around, just use a mobile app like Key Ring, where you can load all your cards onto your phone and then scan it at each retailer.

  5. Aeroplan on September 21, 2012 at 9:09 am

    Hi Andrew,
    Thank you for your in depth review about loyalty programs including Aeroplan. I’m the community manager for Aeroplan and just wanted to correct a few points about the program.
    You can earn Aeroplan Miles by flying on all of Star Alliance partners (including Air Canada, United Airlines, US Airways, Lufthansa and many more.) To see the complete list, I invite to to go to
    Another great tip to earning Aeroplan Miles is using one of our affiliated credit cards. This is a great way to earn a lot of Aeroplan Miles quickly.
    Hope that helps!

  6. W at Off-Road Finance on September 21, 2012 at 10:12 am

    There are a few loyalty programs I like. The King Soopers gas points amount to about a 2% discount on your groceries, up to 3% if you have a truck with a big tank. That’s not a huge deal, but since their gas and groceries are also competitive in terms of price and location I participate.

    Costco membership is definitely worth it both for price and selection.

  7. Elizabeth on September 21, 2012 at 11:17 am

    All good points, but you forgot one major benefit for companies: they’re able to track your spending habits. That’s valuable marketing information people are giving away for sometimes meager rewards.

    I only join rewards programs if I think I’ll get fair compensation for the information I’m allowing the company to have. (Which is why I hardly have any!)

  8. James on September 21, 2012 at 1:06 pm

    Oh rewards programs. . . I tend to steer clear unless, I’m shopping there anyway. I often don’t pay to much attention to the programs, if I get the points I get the points. I know some people that are crazy when it comes to building up and using points. Some will even go as far as actually purchasing points for twice their value just so they can get a “free” hotel stay. There are some programs that are beneficial to one person but not another. You just have to be aware of what you really need and want from a program. Some just aren’t worth the hassle.

  9. krantcents on September 21, 2012 at 3:19 pm

    I like loyalty programs for local restaurants too. I have used United and other airline rewards programs tot my advantage. I am also a member of Costco and receives rebates. I also have a Target card that provides a 5% rebate on my purchases.

  10. Andrew @ She Thinks I'm Cheap on September 21, 2012 at 4:07 pm

    Great feedback all, I hadn’t heard of the Target program or Jean Coutu before. Rewards programs can be great as long as you understand them.

    Elizabeth is bang on about the tracking of purchases. More targeted advertising = more spending.

    As James mentioned, a great time to participate in a program is when if you were going to shop with the same merchant anyway.

    Mobile wallets are gaining popularity which is great. My wallet can only handle 5-6 cards so I guess that helps limit the number of programs I can join!

    Valerie makes a good comment regarding the star alliance members.

    Just to add another quick example, I looked up a round trip flight from Toronto to Paris from Oct 28 to Nov 4. The cheapest option is to fly with American Airlines, a OneWorld member. It would cost $1,126.32.

    Flying with the cheapest Star Alliance member, United, would cost $1,233.96.

    In this particular case it is 9.5% cheaper ($107.64) to go with AA over united. With most reward programs worth 1-3%, it is clearly cheaper to fly with AA in this example.

    Always do your homework!

  11. Jason on September 22, 2012 at 2:32 pm

    Great look at loyalty programs Andrew. Although it is kind of small potatoes but I like the Papa Johns reward program. I have had many free pizzas from gathering those points together.

    – Jason

  12. Daisy@EverythingFinance on September 23, 2012 at 9:55 am

    I’m part of both my credit card loyalty program as well as Shoppers. I like Shoppers Optimum points but I don’t accumulate them nearly fast enough. I have had a points card for years and only have like $40 worth of points.

  13. Garrett on September 23, 2012 at 4:56 pm

    Like some commenters above I also try avoiding these programs unless it is a business I already use regularly anyways. It helps to cut down on a few sillier impulse purchases. So on here the only ones I use a lot are Aeroplan and some for my credit card. They’re definitely worth it for the minimal research effort involved to learn how to best take advantage of them.

  14. Liz on October 4, 2012 at 8:34 pm

    Another thing to be careful with frequent flyer programs – renting a car and getting miles. Often car rental companies charge $1-2 per day for this, which actually is sometimes more than the miles are worth!

  15. albert prince on January 27, 2013 at 12:09 pm

    Perhaps you could do an article about how loyalty/reward programs sell your information, overcharge you and generally do not give you “something for nothing”.

    What are the programs doing with all my personal information?

  16. Tamara on February 18, 2017 at 8:08 pm

    I’m a Lyoness member, and although they are new to North America they have a huge presence in Europe. Anyhow, I mostly buy the gift cards for gas, groceries etc because I can get a little cashback and then get Airmiles dollars on top. Double dip

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