The Smart Girl's Guide To Loyalty Programs

We’re all experienced and, dare we say, savvy and expert shoppers. We know what we want and the best ways to get it, but we also want to make the absolute most out of our retail experience. And, that can include joining a loyalty program. You know, a frequent shopping plan that lets you make money as you spend it — and enjoy a few extras along the way, like free shipping, first dibs on sales, and freebie services. These enticing plans come in a few different formats: the no-fee, non-credit card rewards program; the subscription membership program; and the credit-card loyalty program. We’ll deep dive into that in a bit.
Before you click open a new tab and start signing up, remember that there's no such thing as a free lunch (that's why that cute tote bag is called a gift with purchase). There actually is a cost to all loyalty programs — even if one is technically gratis — be it an annual subscription fee or a blemish on your FICO credit score. But, that's not reason to swear off these fabulous-sounding, strings-attached programs altogether. Just be smart about joining. Read on for our primer on loyalty programs, so you can squeeze every possible benefit out of your chosen one(s), and protect your financial standing at the same time.
The Rewards Loyalty Program
These cards allow you to accrue points toward perks and freebies while you shop, and don’t require a registration fee or credit-card commitment. It costs zero money to join and won’t affect your credit score. Just make sure the benefits suit your needs. (There is only so much room on your keychain.) For most brands, each dollar you spend translates to a point, and then various spending benchmarks (or quantities of points) are tied to giveaways or discount opportunities. You’re likely already a member of this kind of program; it’s your Walgreens card or the barcode you get scanned at the grocery store checkout line. But, you’re looking for clothes and gifts right now, we know.
What You Get
East Coast-based luxury discount retailer Century 21's C21 Status is one such program, the goal of which is to earn cash back by spending your way into higher "status" levels (2% for red card members; 3% for black), and earn access to express checkout lines and exclusive discounts.
Beauty junkies already have another red-and-black card in their wallets: Sephora’s Beauty Insider, which is also a multi-level program. Here, you get a deluxe sample product with 100 points, a limited-edition set with 500, and a pre-selected full-size product for your birthday. With 350 points (i.e. after you've spent $350), you’re vaulted into the VIB status, which means first dibs on new products, exclusive gifts, and invitations to special sales and shopping events. A still higher level comes with free shipping.
The agnostic shopper’s probably looking for a department store card, like Bloomingdale’s Loyallist (same game, but double points for cosmetics and fragrance purchases). Once you earn 5,000 points you receive a $25 gift card to spend at the store. Let’s repeat that: After you spend $5,000, you get $25. If you’re a member and have the Bloomie’s credit card, your points-earning speeds up, but we’ll get into credit later.
Nerdwallet correspondent Farnoosh Torabi recommends looking for memberships that give you access to exclusive sales. As a Sephora VIB member, she appreciates that one week per year when she gets 15 to 20% off of all products. “That's pretty incredible, considering cosmetics rarely go on sale,” she says. “And, that's money back in my pocket. Look for programs that offer real savings either in the form of discounts, free shipping, or credit towards future services,” like the ones listed here.
What To Look Out For
Think of the non-credit card, non-initiation fee rewards program as a shopping gateway drug that entices you to spend more money or sign on for credit. It’s just like that Kim Kardashian app: You’ll constantly be tempted by the possibility of more rewards, more freebies, more status. And, to get those things, you need to earn a tremendous amount of points (i.e. spend, baby, spend) or give in and open a credit card — and then spend.
Also, you may not even be able to redeem the promised perks. Do you really shop in actual stores enough to make VIP checkout a bonus? Torabi admits that those free Sephora samples fill up precious drawer space, and I can personally say I’ve never managed to collect my birthday gift. She’s also skeptical of the personal shopping or styling perks common to department stores. “Truthfully, anyone who wants help with shopping can walk into a store, ask for assistance, and often get it,” she says. We'd add that they could also look to their favorite website for styling advice. And, of course there are the exclusions.
The Online Membership Program
Different from a free rewards card scenario, an online membership program ensures you’re a devoted customer through a number of addictive benefits, from free shipping on your purchases to innovative extras that might not have anything to do with shopping (music streaming, for example) — and you never have to leave the comfort of your own couch. The catch: There's often an annual subscription fee, although some services offer an initiation discount.
The juggernaut of an example of this type of program is Amazon Prime, you know, how people enjoy free two-day shipping on anything from a Mara Hoffman dress to flat-screen TVs and binge-watch Veronica Mars on their iPhones — all for $79 a year ($99 if they signed up after March 2014). The list of perks is almost silly: free unlimited photo storage on the Amazon Cloud Drive; a 30-minute head start on select deals on and the daily fashion flash sales on MyHabit; unlimited, ad-free streaming on Prime Music (and mobile downloads for offline play); HBO content; early book downloads on KindleFirst; and that precious Ms. Mars and more on Prime Instant Video, which also includes really good original programming, like Transparent. While everything about this seems tailor-made for those of us with instant-gratification issues, the main draw is its free, two-day shipping, which adds up to big money saved for frequent e-comm shoppers.
Amazon Prime may be the kingpin of this category, but there are a couple new options recommended by TechCrunch. There’s Newegg Premier, which is more home and electronics oriented, but does feature fashion offerings from lines like Levi’s and Aeropostale, plus beauty products from a smattering of brands, including Stila and Lancaster. The service offers free three-day shipping, sale alerts, and members-only deals, and, at $49.99 a year, it just about halves Amazon's fee. For more fashion-y stock, try ShopRunner, which boasts free two-day shipping and discounts on brands from Prada to The North Face for $8.95 a month or $79 a year.
What You Get
Free shipping goes a long way, especially if you depend on online shopping for a good chunk of your household needs. (And yes, that monthly supply of Korean face masks totally counts as a necessity.) Free shipping could end up paying for itself — especially around the holidays when you’re ordering everything from gifts to place-setting accoutrements. Plus, access to movie, TV, and music streaming (and downloads) goes beyond a fun or convenient perk — it could be reason enough to cancel cable, and save thousands.
What To Look Out For
“If you purchase from a site often, the savings and rebates can absolutely add up over time,” confirms LexION Capital Management CEO and founding partner and all around money guru Elle Kaplan. “The only real danger with a program like this is becoming over-reliant on one service over all others. As a shopper, you need to give all purchases their due diligence. A retailer's hope in offering a service like this is making you reliant, to the exclusion of all other stores. As long as you stay a smart and nimble shopper, then indulge away and get the savings you deserve.”
“One other caveat,” Kaplan adds. “Not all subscriptions are created equal. Be sure to read the fine print and make sure you're not signing yourself up for exorbitant fees, binding contracts, or any other sneaky business tactics.”
The Loyalty Credit Card
You know what this is. Offers are foisted upon you every time you check out at a Banana Republic or Gap; promotional postcards rain out of every catalogue, and sign-up offers deck store shelves like so much holiday tinsel. They often come with a first-time purchase discount that can be hard to turn down at the register when your arms are full of one too many push-up bras, say, at Victoria’s Secret, or your husband went ham on the J.Crew gingham shirts.
The trick to making this kind of card work for you is to be sure you're earning something back for every dollar you spend, especially if you’re shopping a lot at certain stores. The holiday season is the optimal time to capitalize on free shipping and rack up points on all those purchases you were planning to make anyway.
What You Get
If you sign on for the Angel card, you earn a point for every dollar spent (double points for bras) and score $10 for every 250 points accrued. Cardholders also enjoy early access to sales and free shipping on orders over $100. J.Crew not only offers a $25 rewards card for every $500 spent, but invitations to members-only events, early access to select items, and free alterations.
There are also the department store credit cards, like the Neiman Marcus InCircle program, which has been around for 30-plus years. (Maggie Lucas, director of InCircle credit and gift card marketing says over a quarter of customers are members.) This is another tempting, game-like system with seven different membership levels — from One up to the illustrious Chairman’s Circle. Level One members earn two points for every dollar spent and get a $100 gift card when they've reached 10,000. All this spending also adds to moving on up. At the very top, Chairman’s Circle members (who spend at least $600K a year) enjoy ALL the swag, including five points per dollar spent, free two-day shipping, free alterations, and fur storage (because) and complimentary beauty and wardrobe consultations. We'd hope that kind of green also comes with a fully furnished studio apartment on the top floor of the store, but don't think it does.
Nordstrom spokesperson Dan Evans Jr. says that the department store’s loyal Rewards card members (about 20% of store customers) take the most advantage of the early access to the storied anniversary sale in July, and free alterations. While they're spending away, they get a $20 gift card for every 2,000 points.
Remember the Bloomingdale’s card we discussed earlier? If you spend $3,500 on it, you reach “Top of the List” benefits for your rewards program, which include free shipping, comped gift wrapping, and the chance to earn triple points on a selected day.
But, make sure you’re taking advantage of the most elite benefits you get. For instance, Neiman Marcus InCircle has a specific “members only” page that specifies which special events and discounts are exclusive to members. Nordstrom makes it clear on its website that only Rewards members gain that coveted early access to the anniversary sale, and identifies other benefits specific to that group.
What To Look Out For
Well, the money people have plenty to say about this subject. First off, the annual percentage rates (APRs) on store cards are much higher than regular credit cards. “Those APRs can be deadly,” Kaplan cautions. “They regularly top 20% or higher.” (The APRs on regular credit cards range from 13% to 15%.) So, you definitely want to pay off your monthly balance. “If you're only shopping [at a store] once or twice a year and have a hard time managing your debt, forget it,” says Torabi (while probably also slowly shaking her head).
Also: your all-important FICO credit score. We totally get that temptation to open up a store credit card to enjoy a one-time percentage off or dollars toward your first purchase — especially if it’s an investment buy. But, closing a card immediately after has its consequences. “You want to be careful with opening too many cards,” cautions Kaplan. “Closing too many cards can also have a harmful effect [on your credit score]. So be sure that, if you open a card, you intend to keep it open. Your credit score will suffer if you close more than a couple cards a year.”
Furthermore, your credit score is affected by what Torabi refers to as “credit card utilization,” in other words, the charges you’ve racked up relative to your credit limit. (“The lower utilization the better,” she says.) Store cards usually have low limits — sometimes starting with just $1,000. So, for example, one $500 leather jacket later, you’ve used up 50% of your credit limit, and potentially pulled down your credit score.
So, weigh the options. Will you really make the most of it? Will these programs work for you — like, do work for you, your budget, and your shopping needs? It's a great time of year to take advantage, if so. But, resolution season is just around the corner, too, and that's when many pieces of plastic meet their demise by scissors because it just wasn't in the cards.

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