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4 years ago

Rewards Programs - Are they worth it?

by Kevin Silver

Rewards Programs - Are they worth it?

We can all agree that there is nothing like the rush of a good deal. Knowing that you spent less than expected on an item you were really interested in and have been watching the price fluctuate for months on end generates feelings of euphoria (Ok, maybe not that intense). To elevate this feeling further, we are also aware that we can then use accumulated points to pay for other items or vacations that are on the bottom of our priority list. As competition grows and reward programs fight to attract customers, it is us, the consumers, that will feel the direct benefit in our wallets. A free cup of coffee every few weeks? Who would want to say no to that?

As rewards programs become increasingly common, we must always ask ourselves one important question before making a decision, “What’s the catch?” This is not to suggest that such programs are not in your benefit, but you must weigh the commitment before moving forward. Are the rewards programs really worth it or are we kidding and convincing ourselves that we are “saving” money when in fact we may be spending more had we not signed up for that card or that program? Let us take a deeper dive into what these rewards programs really are offering and which ones have the potential to help us gain more.

According to an article from CTV1 the number of Canadians using rewards programs are extremely high, hovering at roughly 89 percent. But even with these high numbers, there is widespread debate as to whether they are worth it, both from a consumer’s perspective as well as from the seller’s perspective. Furthermore, loyalty programs also vary with what they have to offer to customers. Whether it’s the dollar value, special discounts to cardholders, or travel mileage, there are different products catered to different consumers. According to a marketing professor at Queen’s University, the best programs are the ones that offer customers customized deals based on their previous purchases. For example, free products or discounts on products that are purchased on an on-going basis seems to be highly sought after.

However, not all loyalty programs are worth the money you will put into it2. Some programs can cause the consumer to spend more than they would otherwise spend without the program. According to the Credit Counseling Society, consumers tend to spend up to 15% more they normally would spend with a reward credit card over cash. Whether it’s a rewards card that is a credit card or not, it is easy for the consumer to want to spend a little more to reach the next rewards level. It’s safe to assume that it is more financially beneficial to the company than to the consumer if they choose to spend that little bit more for those few extra points.

Cashback credit cards are the best way to reap your rewards, as its dollar for dollar value, but one should always make sure to read the fine print to ensure you understand the value you are getting. Consumers in Canada find they can earn 1-2% cashback on their purchases on these credit cards. Those consumers looking to gain from non-credit card loyalty cards should identify their spending patterns, and not change their regular patterns to gain a few extra points. Know what stores you shop at and what products you buy on an on-going basis. Collecting points in such a manner may be slower than spending a little extra on something you don’t need, however, when redeeming those points you truly are fully benefiting from the rewards. If you ever find yourself in a position where you overspent on your cards and need a quick way to pay them off, see what Magical Credit can do for you!




Magical Installment Loans: We offer installment loans in the amount of $1,500- $20,000 that have a 12-60 month term with an APR 19.99% min - 46.8% max. On $1,500 borrowed for a 1 year term at 3.9% per month, the total cost of borrowing including a $194 fee is $896.00. The total amount to be paid back with interest and fee is $2,396.00. AB License #349796 and BC License #83626

NOTE: Our installment loans are open, so you can pay off your loan at any time with no penalty. You will only pay interest up to the date you pay it off.

Magical Cash Loans - Ontario, British Columbia, Northwest Territories, Nunavut, and Yukon Residents only: We offer Magical Cash Loans in the amount of $100-$1,500.00. The cost of borrowing is $15.00 per $100.00 for each $100.00 borrowed. On a $1,000.00 loan for 14 days, the cost of borrowing is $150.00. The total to payback is $1,150.00 which is an annual percentage rate of 391.07%. ON License #4741412. BC License#85919.

The Loan must be paid in full by the end of term, no extensions or exceptions, no automatic renewals. Failure to pay your debt on time will impact your future credit with Magical Credit Inc. and other credit lenders. All delinquencies will be reported to the Credit Bureaus.

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