Welcome to the new rewards economy

Remember the good old days of straightforward loyalty programs? It was simple—get a dozen Subway stamps and redeem them for a free six-inch Cold Cut Trio. Those flimsy paper cards made tracking your progress (and purchases) much easier than today’s programs.

Driving the news: Canadians use loyalty rewards programs to help pay for their everyday expenses by collecting virtual currency like points or miles they can later redeem. But watered-down rewards and shifting partnerships have made the loyalty landscape a bit convoluted. 

Why it’s happening: Loyalty rewards programs tend to take off when the economy is shaky for a few reasons

  • ”Earn-and-burn” systems where customers spend a dollar but earn a point they can spend later make people feel they’re saving (even while spending). 

  • And it’s cheaper for a company to keep an existing customer by offering them shiny perks like points than it is to attract a new one.

Why it matters: Companies don’t offer reward points out of the goodness of their heart—you’re the product they want! All that precious data around your spending habits is a money-maker for them.  

Still, rewards programs can be a good way to save some cash—here’s how to make the most of them:

  • Calculate the cost per point. The formula is (Value of the redemption − surcharges) X 100 / points required = CPP. Or this website can help you with the math.

  • Use points strategically. Charge stuff on your cards relative to their rewards category to maximize earning.

  • Need to hit a minimum spend? To earn a fat welcome bonus, buy a bunch of gift cards you can spend when you want.

  • Consider switching. Do you still need a gas rewards card if you switched to an EV? A cashback card may be more functional for you. As your life changes, your rewards should align with your new money goals