What is a Loyalty Card?

A loyalty card is a paper or plastic card, normally the same size as a typical credit or bank card, which is provided to retail customers to give them benefits not offered to non-cardholders. Benefits may include a percentage off the purchase, points toward a store gift certificate, or sale prices on certain items. Other common names for the card include club card, points card, rewards card or advantage card. A significant number of retailers also offer these cards in smaller, key-chain sizes for the convenience of their customers.

At chain supermarkets and drug stores around the world, the card is normally utilized to track customer preferences and buying habits in exchange for providing monetary rewards to their customers. To obtain the card, the customer is typically required to fill out a form with their name, address and phone number. Each time the card is used for a purchase, magnetic bar codes record the items on the receipt and coupons and incentives on these products are normally offered to the customer on future visits.

Some stores offer additional rewards for using the card. A customer may build up rewards points that can be cashed in at a certain level for cash off coupons on any item chosen from the retailer. Other programs offer free merchandise the customer chooses from a catalog of incentive gifts that become higher in value based on the earned points.

Other types of loyalty programs are offered by booksellers, electronics stores and department stores. These are generally structured to offer percentage discounts to customers once they have spent a specific amount of money during a specified period of time, usually six months or a year. These types of cards usually do not affect the price paid for purchases, whether or not they are on sale.

Airlines and credit card companies traditionally offer loyalty card programs based on frequency of use. The airline programs are customarily based on the number of miles flown and incentives typically include free upgrades or discounted tickets. Credit card companies’ reward programs are ordinarily structured to award points based on purchase amounts that can be used for discounts or merchandise. These two types of companies often work in conjunction with each other so the customer can reap double rewards for the same transaction.

While some consumers may shun the concept of loyalty card programs as being too invasive into personal buying habits, the practice remains popular worldwide. Other businesses that have instituted loyalty card programs include hardware stores, restaurants, hotel and motel chains. Loyalty programs have also recently gained popularity online, with groups of retailers offering rewards through one card that can be used at multiple Internet stores for discounts and other incentives.