Reward cards. The ubiquitous, small pieces of plastic the size of a credit card with a store logo and your name on the front, and a magnetic strip or bar code on the back. Whether they’re from grocery stores, gas stations, credit cards, or department stores, it seems you can’t shop anywhere without being asked for a rewards card or being offered one from a helpful clerk. Almost every major retailer offers them, and in turn almost all of us carry them around in our wallets and purses, planning to save money and to garner enough points to earn "free" rewards. Most of us accept them without question, seeing only what we can save, or get from the card, rather than considering what the card will cost and take from us. Please don’t get me wrong, I’ve got four reward cards that I use regularly to save money on groceries, gas, other purchases, and collect points for future rewards, and I’ll keep using them as long as I can save money on my next carton of milk, but I still have to ask, what is the real reason for these cards? Do they really help us as consumers? Can we really build enough points to earn that new coffee maker or go on a family vacation somewhere hot and sunny next winter? The answer is, of course, yes, you can eventually earn enough points for any reward, but it’ll take a considerable amount of time, extra work, and cost a lot of money.

Almost all us know of someone who has used reward points for a free trip somewhere, or gotten a free appliance for shopping at one store enough times. But what is the real reason for these cards? Is it really about offering customers discounts on goods and rewards for their loyalty? Or is it more about getting you in the door so you spend your money there, instead of at a competing retailer? Consider this situation. One major grocery store will offer you a coffee maker, retail price of $49.99, when you redeem 22’000 points. Sounds okay, right? You buy groceries there, collect points, and get a free coffee maker. Simple. But consider that earning each one of those 22’000 points will cost you one dollar in purchases at that store. So to get that "free" coffee maker you just spent 22’000 dollars on groceries not counting any double-point specials. Who came out ahead in this scenario? Sure you got a coffee maker, but the retailer got $22’000 worth of your business. Is that a fair trade? Is your consumer loyalty, hard earned money, scheduling your buying around "double-point Tuesday’s" and point coupon flyers, and paying potentially higher prices to earn those valuable points worth a $49.99 coffee maker? Maybe it is. I’m not so sure though, considering it’ll take years to accumulate that many points, (and many of us will never earn enough points to make redeeming them worthwhile), you’re giving a lot more of your business to one retailer in a competitive market than you’re potentially getting back in rewards.

That’s all well and good you might say, but we all still need to buy things, and I might as well get something back for doing so. Fair enough. That’s why a majority of us use reward cards. But reward cards aren’t only to get us in the door. They also track our spending habits.

They track what we buy, and how often we buy it. They build a profile of you as a consumer so the retailer is better able to stock goods that you are more likely to buy, over goods you aren’t as likely to buy. In this way stores can better direct their purchases and stock to your likely purchases. In the long run you end up spending more, retailers end up earning more, and your private purchase information becomes free market research to better separate you from your money. Consider again who is really benefitting in the long-term from reward cards. Something to consider next time a clerk asks you for your reward card. But hey, maybe someday you’ll get a new coffee maker.