hidden cost of loyalty interesting article

[Poirot]

http://ca.finance.yahoo.com/personal...ost-of-loyalty

[thecountess]

Thanks

[lekate]

Excellent read, thanks. It's really funny to think that others actually believe these programs to be "free", the money to cover these products come from somewhere, and that somewhere is the prices of products in store.

[Natalka]

You need to be a good consumer/shopper to know prices of things, and which are 'deals' or not, compared to other stores/sites. Some loyalty cards are worth having, others are not - depends upon the family, its preferences and buying habits.
Also, some people don't realize how the loyalty programs keep track of purchases, so Big Brother remembers what you have bought! Marketing can then be targeted to certain groups of consumers, though I don't know if that's currently done.

[maggiespice]

That was indeed very interesting! I agree sometimes it pays to be a loyalty member, sometimes not!!!

[Poirot]

Excellent read, thanks. It's really funny to think that others actually believe these programs to be "free", the money to cover these products come from somewhere, and that somewhere is the prices of products in store.

Save On Foods used to have a lot of bonus points on indivual items something like papertowel would be $2.50 then for example with 50 bonus points it was $3.50.It just seems Shoppers have lots of popular items on good sale in the flyer when it's bonus 20x points and when it's bonus redemption the flyer doesn't seem to have as much good deals.

[travelgeek]

Most of that article is accurate except the following:

Frequent-flyer miles: legalized kickbacks

In fact, frequent-flyer programs are among the most troubling marketing programs out there. In many cases, especially for business travel, they act as legalized kickbacks. That's because frequent-flyer plans enable the traveler (who either buys the ticket or influences the purchasing decision) to get a personal benefit (a free ticket) for money spent by his company.

That's because time spent on travelling is usually done on our own time. In many cases, we get up at 4AM to fly to a meeting, then fly back the very same day arriving late at night. Also, when we have to stay overnight, I've never slept in a hotel bed that could be has comfortable as my own bed. So I am entitled to every frequent flyer point.

There is also substantial evidence that the vast majority of frequent-flyer tickets issued are not declared as employment income, which means the government is cheated out of millions of dollars. According to a Canada Revenue Agency representative, the agency cannot provide details on the amount of frequent-flyer ticket income declared, because it was so small that it fell into the "other revenue" category on its public statements.

The CRA no longer considers these to be taxable benefits.

"Effective for 2009, the CRA will no
longer require these employment benefits to be included
in an employee’s income, so long as:
• the points are not converted to cash,
• the plan or arrangement is not indicative of an
alternate form of remuneration, or
• the plan or arrangement is not for tax avoidance
purposes."

http://www.cra-arc.gc.ca/E/pub/tp/it...itnews40-e.pdf

It also appears the vast majority of frequent-flyer benefits go to upper-income Canadians, leading to a situation in which the general public is, in effect, subsidizing the vacations of the rich. About 27 percent of Canadian households have an Aeroplan member within, but the percentage shoots up to 80 percent among households with an income of more than $100,000.

That's because many who are in that income bracket also tend to spend more on travel, thus we are more likely to have an Aeroplan account, which is more relevant than an Air Miles account.