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Are Loyalty Affinity Credit Cards Worth It?

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Penn State Credit CardOne of my friends absolutely loves his Penn State-branded American Express card (I think it’s a “skinned” AMEX Blue card) because he gets to earn “points” towards various Penn State-related products and services. An example is the annual Alumni Association Annual Membership which is available for 7,100 points. Sometimes I think he gets amped up seeing Joepa on the face of the card. :)

It made me wonder whether these types of loyalty credit cards are worth it. The ones that most immediately come to mind are the gas station credit cards where you get higher cash back or reward points when you use it at their gas station.

Brand Loyalty Cards

Let’s use the BP Visa Card as an example, here is the cash back schedule:

  • 5% rebates on all BP location purchases
  • 2% rebates on all eligible travel and dining purchases
  • 1% rebates on all other eligible purchases

Except for the 2% on eligible travel and dining, the schedule matches what you would expect from a gas station reward card. You get 5% at their gas stations and 1% everywhere else. This is a good deal if you always buy gas from BP, it’s a less good deal if you don’t.

There’s a reason why they’re called loyalty cards – they reward brand loyalty. In the case of gasoline, where you have a commodity good, where the differences between each brand’s product is very small, loyalty cards aren’t as good because you may end up paying more than you should for something. Gasoline is the best example of this because if you see one gas station, chances are another will be right across the street.

Brand-Agnostic Affinity Cards

Then you have the case of my friend who has his Penn State branded card where he’s rewarded points based strictly on how much he spends, not where he spends. With brand-agnostic affinity cards, you have to review the catalog to see whether it’s financially prudent.

When I reviewed the Citi Thank You Network reward catalog, American Express Membership Rewards catalog, and Discover Cashback reward catalog, I found that the three were very different. You need to review the catalog yourself to find out the cash-equivalent value of the points to see what makes the most sense.

Do you use a brand affinity card or brand-agnostic card? If so, what card and why? Do you find it’s worth it or too much hassle? Has it affected your buying behavior?

{ 28 comments, please add your thoughts now! }

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28 Responses to “Are Loyalty Affinity Credit Cards Worth It?”

  1. pcallaghan says:

    I have one of the Penn State Alumni Association Mastercards through Bank of America. It was the first card I received, and received it initially bc I thought it’d be the easiest to get. As for rewards, it has some but only if you are really into PSU football and given my free year in the association just ended but I’m going back for my masters I don’t need to use points towards the membership fee… therefore I just don’t use the points (come to think of it, I need to look into where and how to actually use these points it doesn’t appear to be spelled out very well on my account page)

    • pcallaghan says:

      Just an addition to this, after checking, I had to talk to one of the agents to get the points on my card… I’ve had my card for 5 years, thought I was gaining points but never was… Everyone double check this!

  2. Daniel says:

    This post immediately reminded me of the info-graphic regarding popular credit card rewards programs on the mint.com blog last month – http://www.mint.com/blog/saving/reward-points-the-real-deal/

    Personally, I have always stuck with cash rewards cards from Discover and Amex. The Amex blue card is fairly brand agnostic, but offers additional rewards for Gas, grocery and drugstore purchases. I have always wondered why the card has singled out these areas for higher cash back.

  3. zapeta says:

    I’ve received many applications for my alma mater’s alumni credit card. The rewards programs that the card offered wasn’t competitive compared to my other cards and the interest rates were higher so I never tried to get one.

  4. I used to have an Iowa State branded card through MBNA. I loved having the card, especially since Iowa State is the “minority” team in Iowa.

    Unfortunately, BofA bought out MBNA, and we ran into some really bad customer service as a result, as well as some technical issues on their web site – such as having a payment toward the balance get processed for the wrong amount.

    I got so annoyed at BofA that we not only canceled both our cards with them, we also snatched our mortgage away from Countrywide (which was in the process of being bought by them) when we refi’d. BofA had messed up so many things with the CC that we didn’t trust them to handle thing like escrowing for property taxes.

    We also have a BP Amoco card through Chase. I’m gas station agnostic, but the 5% cash back on gas purchases drops the Amoco far below competitors, and I put a lot of miles on the car (~70 mile commute each day). When gas was $4/gallon, it was even a bigger deal.

  5. Peter says:

    I think the cards with the school or favorite team on the front are a good way for the credit card companies to promote card loyalty. After all, if you cancel their card, you’re also canceling your loyalty to your favorite team! Now who would ever think of doing that?

    • Right – especially since they have exclusive agreements with the schools/teams.

      I’ll admit that I put up with more crap from BofA because the card had my University on the front … but in the end, it still wasn’t enough.

      But if it had been a generic card, It would have been canceled much earlier.

      My loyalty to my school does remain intact, of course. Go State! :)

  6. If what you are loyal about really gets you going, then sure! After all it’s all just one big gimmick, so anybody signing up for multiple cards is just handing over free money to these companies.

    But ya know, charity is a good thing, especially since the economy is back!

    I’m loyal to my house, so my charity is using my home rebate card to pay off principal.

    Goooo house!

  7. Soccer9040 says:

    I’ve never been one to go after any loyalty cards. Really who ever sees your cards? Its just for you to feel good about your team/college/whatever. I’ve seen some that say they contribute a % back to your university, but if you had a cash back card you could more then offset this by just donating the tiny tiny fraction of a penny that your card would donate anyways.

    Go for the cash back cards. My favorite is Chase Freedom. I get 1% on everything and 4% on my top 6 spending categories every month. The categories change based on how you spend. There is no cap to these bonus earnings like there used to be.

    There are just some decisions that need to be made for your own personal good. If your loyalty card gives you perks in your eyes then go for it, but don’t just go for that sweet college credit card because you think you are supporting your university.

  8. cubiclegeoff says:

    Generally the school cards seem to not be competitive. The only brand card I’ve used was an American Airlines card so I could get the free miles, then I cancelled. I’ll stick with my 2% cash back on all purchases card.

  9. Gimena says:

    I have an American Airlines credit card and I love it. When I first opened the account, I got enough miles to get a round trip ticket to Europe. That will more than make up for the annual fee that I pay, $80. The interest rate I was ofered is as low as my non-rewards card and I pay it in full every month so I don’t pay interest.

    Between the free miles, the reduced milage required for certin flights and the miles earned, I would never go back to a non milage card.

  10. Personally I avoid “branded” marketing programs. If AMEX provides a points program, someone (you and fellow card holders) is paying for the cost of the products or services provided. If they provide a points program that also incorporates a third party, the costs can only go up. If their costs go up so must the price that you pay.

    Wouldn’t your alma mater benefit more if you simply provided them a direct donation?

    • Soccer9040 says:

      YES! – I’m glad there are people out there who can see through the marketing pitch. I feel like being a good consumer equates itself to being able to figure out how everyone in the transaction is benefiting. Not everything they tell you is true.

  11. johnpmcglynn says:

    AMEX Membership Rewards has fantastic catalog buys.

  12. glixon66 says:

    For me, any rewards CC, be it brand loyalty or affinity, only “pays” off if you pay it off every month. If not, you have to subtract the interest paid from the reward, and, in that case, it isn’t worth it in my opinion, especially if your goal is to increase your net worth.

    We have a Costco Amex Card, which we pay off every month, and which gives us a rebate every year for anything at Costco. Since we buy certain items in bulk, this works for us.

    We have a US Bank Visa Rewards card, which we also pay off every month, but which we are getting rid of. We have used it in the past for a flight or two, and an iPod Nano, but there’s not a whole lot listed in the rewards catalog that we want or need.

    However, in place of this CC we are getting rid of, we received an REI Visa Card and the rewards offered on it are worth it to us. We go camping and backpacking a lot, so being able to purchase items from REI and get rebates that we can use for future purchases, is something we will use, often.

    Again, we will be pay it off every month, so the rewards are rewarding to us.

  13. Danny says:

    I use the Citi Bank AAdvantage card. We earn miles for everything that we purchase at one per dollar. The best thing about this card is to take advantage of shopping at their preferred retailers if you shop online. That way, you earn one mile per dollar plus the miles per dollar spent for the retailer. The drawback is that the rewards are only good for flights and/or AAvacations websites.

    If you want reward points that are easily reemedable for gift cards to various places, I would use the Chase Freedom Card. It still has $100 gift cards for 10,000 points which is kind of rare as other card are charging 12,000 points.

  14. jeff says:

    Targets in the Kansas City area and San Antonio area are currently testing out a new marketing strategy for their Target branded cards. If you use your Target Visa or Target debit card at a store in KC you automatically get 5% off your purchase immediately, 3% in San Antonio. We’ll see what happens.

    • We recently applied for a Target Visa. Our credit score is mid/high 700s.

      When we got the card, which we intended to use as a replacement for a recently canceled card, the credit limit was slightly less than 1% of our annual gross income. The customer service folks refused to bump the limit, so we refused to use the card.

      Seriously, we charge (and completely pay off) considerably more than that amount every month. The Target card would have been pretty much worthless.

  15. HuBu says:

    I would love to have a University of Florida BoA card but they don’t have it. Somewhat weird. Either way, my check card is an ASME one.

  16. eric says:

    Nope, no interest in loyalty cards. I go whereever the rewards speak to me :)

  17. BrianC says:

    For simplicity’s sake I prefer cash back over anything else.

  18. skylog says:

    my loyalties rest with the best rewards…that said, as i am in state college, nice to see jo pa repping on the page; however the card would be more realistic if he was yelling at someone in the picture.

  19. Michelle says:

    Brand-Agnostic – Discover Card

    Many options for redemption of rewards…
    1) cash back (about 3 days to your checking acct),
    2) apply to your bill,
    3) donate to charity, or
    4) rewards catalog… and many items redeem for more than the value, example, Gap $20 for a $25 store card.

  20. Fairy Dust says:

    I have a Starbucks VISA card, which I love (I mean, really… free coffee!). The others are brand-agnostic — a Upromise MC through BofA, which we will eventually cancel (I hate BofA and was so upset when they took the Upromise card over from Citi), and a Chase Rewards card.

  21. Chris says:

    Pentagon Federal has a great Rewards Card.
    5% at any gas station
    2% at any grocery store
    and 1.25% everywhere else.

    • saladdin says:

      And they ran a special last couple of months with 5% back on “Back to school” which meant, really, anything bought on Amazon.

      saladdin

  22. Foo Finance says:

    I swear by my Delta Skymiles Platinum Amex. I travel often for both work and play and the miles I earn (and use!) have saved me thousands in airfare. I get a lot of other travel-related perks from the card which more than pay for the annual fee. I get Delta fees waived, bonus miles opportunities, free yearly domestic companion ticket (this alone is worth more than the annual fee!), and other nice perks.

    Seeing as I plan to travel very extensively once I achieve financial freedom it makes sense for me to do this. I spend all I can on the card to earn miles and bonuses. I earn more miles than I can currently use so it is like having a savings account for future airfare.

    I also have the Chase Freedom Visa card for when AMEX is not accepted. I use it lightly and when the points add up I get gift cards for Home Depot or a restaurant I like.

    I am not a fan of brand loyalty cards as I am not brand loyal. I buy whatever makes the most financial sense for me.

    - Bobby

  23. SavingEverything says:

    This post being a branded credit card, I’m wondering why you never wrote about the FIA CARD SERVICES (aka Bank of America Credit cards; previously MBNA) WorldPoints Program and their points and rewards?


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