Just like many things in life, if you work hard at it, you should be “rewarded” (pun intended). Loyalty/reward programs are no different. If you put in some effort, you will be rewarded. What I like about such programs is that the more effort you put in, the more rewards you can potentially earn. Below are some basic steps that you can follow to help you collect, track and redeem points.
Step 1 – Identify Your Spending Habits
Identify your spending habits (such as gas, groceries, drug stores, movies, restaurants, hotels, clothes) and which stores you frequently go to. Also try to estimate how much you spend on each category.
Step 2 – Sign Up on Your Loyalty Programs
Once you have identified your spending habits and stores, sign up for all the loyalty programs of these stores that you think will interest you to start earning points. For travelling, it would be airlines, hotel and car rental programs. These programs are generally free anyway. If they are not free, then I would think twice about it to see if the fee is actually worth it. Sometimes you might not know if you will use that program or not, then only sign up for it when you are about to use it.
Step 3 – Track Your Loyalty Points
Once you feel like you are being overwhelmed by the different number of programs that you have joined, then join one more program, an online mileage manager such as Award Wallet, Using Miles and Tripit. These programs are great because they can help you track all your points on one screen and send you reminders on when your points will expire. If you are uncomfortable using such programs, then you can always create spreadsheet to help you track your points.
Step 4 – Know Your Credit Score and Financial Situation
The reason it is important to know your credit score is because using credit cards is the best way to earn points quickly, especially with sign up bonuses. But before you even worry about your credit score, make sure that you have sufficient money to pay off your credit card bills on time each month or else it will just nullify the benefits that you gain from credit card points.
Step 5 – Find a Credit Card that is Right for You
Be sure to learn the different types of credit cards. Then, also factor in your spending habits, to determine which credit card(s) to sign up for (airline, business, cash back, hotel, hybrid, speciality, student) Watch for double dipping opportunities such as higher than normal sign up bonuses, higher earning ratio on specific spend categories, or first year annual fee waived promotions.
BE CAREFUL with this step. Only apply for a credit card if it is within your means to pay off the balance on time. Otherwise, the interest that you incur on the credit card balance will completely nullify any benefits or rewards that you may receive.
Step 6 – Pay Everything with your Credit Card and Shop Online
I know this can be frustrating for the other people in line when you pull out your credit card for a $1 purchase (yes I do that), but if everyone took advantage of earning the points, it will be normal and we will all be staring at the people who pay in cash. I recommend that you pay for everything with your credit card to maximize the number of points you can earn. What better than to get rewarded for spending money?
Be sure to also shop online. Keep in mind to never go directly to a retailer’s website. Click through one of the online mileage malls (shopping portals) to earn points even more points. But even then, I only recommend that you purchase things online when you see a better price. Cheapest price almost always wins out against earning loyalty points (unless there is a massive points promotion going on, in which some calculation will be required).
Step 7 – Set a Goal
If you are not sure what to use your points for, then set a goal so that once you achieve it, you cash out! Setting a goal can give you a purpose to collect points. For example, if you want to book a one-way trip from Canada to Europe, it would cost 30,000 Aeroplan miles plus taxes and fuel surcharges (which you can use fixed rewards cards to pay for). You may also want to look into how many points you would need to a free hotel night to where you are going.
Once you have your goal in place, you will have a much better idea what step-by-step strategy to take to accomplish your goal.
Step 8 – Cash Out
It is almost like an investment, you are putting in the effort now to earn the points, track when you achieve your goal and then cash out. It’s a great feeling whenever you cash out. You do not want to wait too long to redeem your miles and points. As you know, they constantly get hit with devaluations as time goes on (mostly because of inflation).
I recommend to watch for double dipping opportunities before cashing out. There are usually promotions for using less points to get the same value out of your points. Or using the same number of points but getting more value out of the points.
Lastly, I would also watch for constantly devaluations of points. There is constantly more and more points pumping into the system, especially if more people catch on to loyalty points. Therefore, the value of each point can go down (inflation). Diversification is the key, but if you have an opportunity to use your points, even if it is a double dipping opportunity, it may be better to use your points before they require you to spend more points for the same reward, or worse, points expiring too prematurely.