Understand the true value of loyality cards.

Don’t get suckered into thinking you’re the one benefiting from earning points.

Loyalty cards operated by the major supermarkets and other retailers serve 2 purposes:-

Firstly, they perform great market research. They can see exactly what you are spending your money on and where you are doing it. This is far greater invasion of privacy than any current national ID card proposal. They then use this information to target marketing at you.

Secondly, and more importantly, you end up spending more money with them and earning them more profit. If this were not true then such schemes would not exist.

Many people loose sight of the fact that they get back just a couple of percent of what they spend. Am offer of  3% discount would not turn many heads in a high street window display.

People become emotional attached to building up points as if it were on a par to putting money in a saving account.

Of course, there are excellent offers to be had for people who know how to play the system. If you do your weekly food shop in the same place every week, you may as well take advantage so long as it does not make you spend more than you would.

Cash back credit cards
The above also applies to cash back credit cards. Typically you may get a few percent back on purchases for 3 months, then 1% thereafter on a card with an APR of 15%. So, you only profit from such an offer if you settle your card balance in full each month and are not seduced into spending more by the effective 1% discount.

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