We love loyalty programs that allow us to accumulate points every time we spend in a store.
Shopkeepers also love it, so they know they have every chance to see us face to face in one of their stores.
It’s the same principle with credit cards with which we accumulate “rewards” and “miles”, except that instead of a sign, we are led to favor one means of payment over another.
I don’t need to explain the principle to you, like me, you have a few such cards in your wallet. I don’t know about you, but I have no idea of the value of all these points that I have accumulated.
The only thing of which I am certain is that they will not gain any, on the contrary they risk to devalue themselves with time, sometimes even to disappear.
A parallel monetary system
We have the feeling that we are winning the exchange with loyalty programs, but we always end up paying.
Rewards, bonuses, discounts, cash backs and airline tickets, whatever it is, these freebies don’t fall from the sky. Their costs are passed down the line in the price of anything we buy.
It is as if for each transaction, part of our dollars were converted into another currency, loyalty points. This is no joke, it was already that with Canadian Tire dollars.
Today, these programs tend towards the level of sophistication of banking systems. Their points are redeemed for rewards through platforms that resemble online banking.
It is still poorly framed pseudo-money, like the currency of a banana republic.
Since 2018, however, the programs have been better regulated. Points can no longer expire (wow!), As it is no longer possible for issuers to drastically devalue units in their program.
Still, it’s very difficult to follow. The rules are written in fine print and are subject to change at the discretion of the program sponsor. When the cardholder goes bankrupt, the points are lost and, in the event of the cardholder’s death, they can rarely be transferred to their full value.
So, a reminder to those who rely on their points to achieve their retirement plans, it is risky to say the least. A loyalty program is not an RRSP.
“We recommend having a vision of 12 to 24 months maximum,” advises Jean-Maximilien Voisine, founder of Milesopedia, a website specializing in loyalty programs.
According to him, these programs should be seen as savings accounts linked to specific projects, but whose value remains uncertain.
French websites specializing in credit card rewards programs: