As the cost of living crisis continues, many of us are looking for ways to reduce our spending.

Rewards and loyalty point schemes – such as Flybuys (Coles) and Everyday Rewards (Woolworths) – can seem appealing because of the opportunity to ‘win back’ cash or everyday items for purchases we’d likely make anyway.

However, these schemes can have downsides, too.

Here are some of the pros and cons of loyalty and reward programs.

Pros

• Money spent at the checkout is ‘rewarded’ with points, which can be redeemed on vouchers.
• Points earned at the shops can be transferred to airline points, which can be put towards flights or upgrades.
• Reward members can sometimes get access to other discounts or catalogue offers.

Cons

• Generally, you have to spend thousands of dollars to receive a voucher (for example, Flybuys and Everyday Rewards offer a $10 voucher for every $2000 spent).
• The supermarkets can track what you’re buying and use that information to advertise products to you.
• Loyalty schemes are designed to keep customers loyal. In some cases, this can encourage people to stick to one brand to earn more points, instead of shopping around at different suppliers for the best deal.

A few tips

• Before signing up to a loyalty or rewards card scheme, consider reading the terms and conditions to see how the company uses your personal information.
• Consider checking out how often points expire.
• Look for any fees associated with transferring points or making points purchases.

Source: Australian Competition and Consumer Commission.

Like every article on this website, this is not personal financial advice.