Restaurants and retailers are rewarding repeat customers and trying to bring in new ones with paid loyalty programs.
Maybe, maybe not.
Are Paid Loyalty Programs Worth It?
This goes beyond just the upfront membership fee.
Some additional expenses that hide in the fine print pop up later.
Memberships often come with a mix ofdirect and indirect costs.
Carefully scrutinize these costs in detail.
That means reading the fine print, asking questions and considering the total expenditure over the membership period.
Free shipping may only come with the deal if you spend a certain amount.
You also should look over the cancellation policy and any associated fees.
Does it offer a wide range of payment options?
Is it known for having beefed up cybersecurity?
Does the business have a free trial period?
These all are part of the cost analysis.
The new Target Circle 360 paid membership, for example, costs $99 a year.
But if you already have a Target Circle Card, that shrinks down to $49 annually.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Ask one of these companies to help… Make a detailed list of every perk.
To know the value of each perk, consider your own shopping habits and lifestyle.
If your shopping trips there rarely are more than $35, thats not much of a perk.
Quantifying the value of these benefits can sometimes be straightforward, as in the case of shipping costs.
But other times, it might be more subjective, like evaluating the convenience of early access to sales.
For a more nuanced analysis,categorize your purchasesby potential perk.
Also think about changes in your shopping behavior.
Will you likely go to Walmart more because youre committed to cooking at home more often?
That makes paid loyalty programs become more valuable over time.
The same goes for a decline in interest or need for the businesss offerings.
Finally, consider usingbudgeting toolsor apps that can help you visualize your spending and savings.
These tools can offer insights into your financial habits and help you make a data-driven decision regarding the membership.
This comparison should extend beyond money and look at the quality and exclusivity of the benefits.
First, compare the cost savings a member would enjoy against the expenses of a non-member.
Consider any other benefits that have nothing to do with money.
Assess how much value these conveniences add to your shopping experience.
If the membership grants access to premium products or services you love, this could justify the membership cost.
An important part of this step is to be realistic in what youll actually use or enjoy.
Are Paid Loyalty Programs Right For You?
Deciding whether or not to invest in paid loyalty programs depends both on you and the program.
They arent right for everyone.
Also, be sure to do your own research and compare the paid memberships head-to-head.
This is especially true in the case of cash-strapped startups effectively chained by their own unwise decisions.
New York contributor Kiara Taylor specializes in financial literacy and financial technology subjects.
She is a corporate financial analyst.
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