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Angela Self's Smart Cookies

Taking your dollar further with loyalty points Add to ...

David Kahn, a married father of two, has developed a strategy for earning points that's paying off. At every opportunity, he double or triple dips while shopping or travelling. All purchases are made on a points-earning card, and when he travels, he'll fly with an airline and stay at a hotel that earns points as well. According to Mr. Kahn, there's intense joy in doing more with less, and the game of saving money has now become addictive.

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I admit to not being as strategic or as obsessed as some point collectors out there, but I do know there's something to be said for developing a thoughtful method of stretching a dollar.

Part of the method should be treating your points like cash. If you don't collect loyalty points, you're leaving money on the table. Let's say you're making a purchase that comes to $725. You put down $730, and the cashier says you've given her $5 more than you should have. Do you leave it on the counter and walk away? No, of course not, but that's essentially what I did recently because I didn't have a loyalty card with my regular grocer. I know it's only $5, but it's better than nothing and all it takes is a few minutes of paperwork to start the savings.



People shop for shoes this week at a store in New York.
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After this experience, I've realized there is a benefit to having a loyalty card for any store you shop at regularly. If the thought of organizing and tracking all of your loyalty cards and points seems a bit much, then you'll find such sites as Points.com helpful. This site lets you track balances and easily swap, earn and redeem your loyalty points.

Last month, MoneySense ran the numbers for seven major retail loyalty programs to find out which loyalty card provided the best rewards.

Shoppers Drug Mart came out on top, which wasn't much of a surprise for me. I'm a bit of a drugstore junkie, so I get a lot of value from my Optimum card. It's also a good idea to sign up for the e-mail alerts for each loyalty program. Then you can strategize when to shop to optimize rewards, such as on double-rewards days. As an added note for any point collectors, Shoppers Drug Mart is soon changing its loyalty points program slightly. Right now you can cash in 7,000 points for $10. As of July 1, you'll need 8,000 for $10. If you're close to the 7,000-point limit, it might make sense to redeem this week.

I also think it's smart to use point-earning plastic to pay for items - but only if you're not carrying a balance on your card. If you are, the rewards you earn are outstripped by the interest you pay. Double-dipping with a card and a loyalty program will help to stretch your dollar even further.

If you've got two stores with similar prices in your area, at which store should you be spending your money? Quick calculation: Ask yourself how many points you earn for spending $100. If you spend $100 at store A and you earn 100 points, that's one point per dollar. If every 100 points earns you a $5 voucher, then that's $5 per $100 in spending, equivalent to a 5-per-cent kickback program. You spend $100 at store B but you earn 1 point for every $2 spent. Every 100 points gets you a $5 voucher, meaning you have to spend $200 for a $5 voucher, equivalent to a 2.5-per-cent kickback program. Store A is twice as generous with its rewards. If their prices are comparable, make it a habit of stocking up there.

Run a similar calculation when redeeming your points for non-cash rewards. For example, if I log onto my Aeroplan account today, I can either redeem 15,000 points for a pair of Ray-Ban sunglasses valued at around $150, or I can redeem 15,000 points and catch a flight from Toronto to New York, a flight I wouldn't likely find for less than $300. I'd rather pay cash for the shades and catch a free flight to the Big Apple: seems like a better use of points. I'm re-evaluating my strategy this week, in the hopes that I, too, become a little more addicted to the game of saving - a habit we'd all be better off for having.

Angela Self is one of the founders of the Smart Cookies money group. Read her weekly column on managing debt and saving money at the new globeinvestor.com.

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