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Are rewards programs worth it?

Posted by Oswald Goldstein on September 21st, 2011

At the drugstore the other day, I tried to hand a CVS cashier my Duane Reade rewards card (that didn’t work!), then proceeded to spend an eternity shuffling through the 10 other preferred customer cards in my wallet to find the right one.

 

Turns out I’m normal. The average U.S. household is enrolled in 18 rewards programs, according to a new study by Colloquy, a market research firm in Cincinnati.

 

I decided to look into the possible pitfalls of our rewards obsession for my column in Redbook‘s October issue (on newsstands now). In it I talk about how to avoid overloading on cards, which can easily lead to overspending. Here are some more good tips:

 

  • Get the most out of flying. For frequent flyer miles, choose just one program, and go with the airline with the most flights in to and out of your usual airport, says Tim Winship, publisher of frequentflier.com. More flight options mean better chances of snagging a frequent-flyer seat, which are harder than ever to score.

 

  • Remember to redeem points. In a new Capital One survey, 57 percent of rewards credit card holders had failed to redeem any points in the last three months. Why? Many people said they found the process too difficult. Avoid any loyalty program with impossible-to-understand terms and conditions, says Kelly Hlavinka, managing partner at Colloquy. Generally, points don’t expire unless there’s no activity on your account for 18 months or so, but those rules can change at any time, so stay on top of it.

 

  • Make sure you won’t owe more than you save. Many rewards credit cards come with a hefty annual fee. (I’ve seen some as high as $175!) Watch out for cards that seem too good to be true, because they usually are—some fees don’t kick in until the second year.

 

Which rewards programs do you belong to? Which ones work—or don’t work—for you?

 

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