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Personal Finance

Make loyalty points go the extra mile

Canadians have had long, and recently tumultuous, love affair with rewards plans

WAYNE GLOWACKI / WINNIPEG FREE PRESS</p><p>Josh Derbecker is the co-ordinator for Social Purchasing Portal, a consortium of small businesses and social enterprises.</p>

WAYNE GLOWACKI / WINNIPEG FREE PRESS

Josh Derbecker is the co-ordinator for Social Purchasing Portal, a consortium of small businesses and social enterprises.

Air Miles cardholders may have had the torches and pitchforks out recently, shaking the resolve of LoyaltyOne. The company that runs Canada’s most popular rewards program backed away from its unpopular decision to have older miles expire at the end of the year.

Now, members of a new, Winnipeg-based rewards program are showing their love and loyalty for all things local this holiday season.

If Air Miles is the poster child for large, corporate loyalty rewards programs that sometimes behave badly (at least in the eyes of its users), then the Local Frequency is the antidote for consumers who want their dollars to go further.

For the local economy, says Josh Derbecker, co-ordinator of the Social Purchasing Portal, a consortium of not-for-profits and social enterprises that participate in the loyalty program, "The Local Frequency solves two problems at once. It was initially thought of as an idea for small cafés that are not competing with each other, but every one of them competes with Starbucks."

With their own rewards program, these small businesses were all helping each other compete.

"And then it kind of evolved with this social and buy-local aspect."

For consumers looking for a different kind of loyalty program, the Local Frequency is a chance for them to help themselves — by earning cash-back points — while helping small businesses and not-for-profits in Winnipeg.

Created by local software company Protegra, it’s one of countless permutations of loyalty-rewards programs that have been growing over decades. While they may seem like a new phenomenon — and they have picked up a lot of steam in recent years — they stretch back decades. Just think of Canadian Tire money, which has been around since the late 1950s.

This holiday season, consumers are likely to run up the rewards points as they spend hundreds, if not thousands, on gifts, food, booze and other festive fare.

Consumers should consider spending points to buy holiday goods. Although it may be too late to use some rewards programs to purchase items or travel, there’s still a bit of time with others (American Express’s Rewards’ deadline is Dec. 11) to order and get an item before Christmas.

Some of the more flexible programs allow points to be redeemed for cash that can be used to pay off purchases made this holiday season, says Patrick Sojka, CEO of Rewardcanada.ca.

"The beauty of that is you don’t need the full amount of points," says Sojka, whose site offers information on loyalty programs.

"You buy a $300 flight and you have $100 worth of points? Well, you can redeem that $100 toward that flight."

Programs that offer such flexibility generally are the best fit for most consumers, he says. The more opportunities you have to earn points — and the more ways you have to use them to purchase goods and services — the better value you get.

The Air Miles kerfuffle should have consumers paying attention to expiry dates for points. In fact, that decision has changed the way rewards experts advise collecting and using points.

"We’ve fully gone from saying to hold onto your points, to save them up, to suggesting that you use them as soon as you can because loyalty programs tend to every couple of years adjust the reward redemption rate," he says.

"And those changes are typically not in favour of the consumer."

There’s even a saying among the industry about rewards points’ value: a mile earned today is not worth as much as a mile earned tomorrow.

So there’s no time like the present to use them, says RBC’s retail-card senior director Andrea Metrick.

"You should think about loyalty points as a currency," she says. "And so it’s really a question of choosing what the best payment options are for you for any specific purchase."

It’s not just a matter of what credit card to use. It’s what app to download. Many companies such as Starbucks have mobile phone apps that allow for payment along with collecting, managing and using reward points.

Some programs also offer more rewards for shopping using your phone, or online and at certain vendors. Most members of these plans already know this — the loyalty marketing is aimed at increasing awareness. But what consumers often don’t know is the rewards credit cards in their wallets frequently offer a host of other useful benefits.

RBC Avion Visa, for example, has two Holiday Boutiques in metropolitan Vancouver and Toronto malls that have valet service, a VIP lounge and free gift-wrapping.

Others come with added benefits for travel and for items purchased with the reward credit card. Often those perks are paid for with annual fees, Sojka says.

"In most cases the annual fee comes with a lot of benefits like car rental insurance, travel medical insurance," but they’re not necessarily attached to the loyalty programs themselves. They come with the credit card.

He suggests, if points are your primary concern, choosing a card that does not have an annual fee.

"The main thing is to make sure you’re going to actually use the rewards and, more importantly, the program so you can accumulate the reward points."

Sojka recommends going into a program with a goal in mind — such as earning enough points for four plane tickets to Orlando.

For thousands users of the Local Frequency — an app that you can download on your mobile phone — the goal is twofold: receiving savings, and giving back.

"The more you do it. The more jobs we can create and the healthier the community becomes," Derbecker says.

"It’s as self-serving as it is selfless."

And that can make the spending season merrier all around.

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History

Updated on Saturday, December 10, 2016 at 7:44 AM CST: Photo added

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