Becoming Disloyal: 6 Reasons to Quit a Loyalty Program

Reward programs have covertly taken over America's key rings, eaten up prime real estate in consumers' wallets and spammed inboxes. They offer countless "deals," but at some point, your loyalty may cost you too much time and headache to be worthwhile.

The average American household belongs to 22 loyalty programs and actively participates in 10, according to Colloquy, a firm specializing in loyalty marketing. That's a lot of loyalty, but is it going both ways?

Here are six ways to tell when your loyalty program isn't working for you.

1. High interest rates burn up any rewards. Retail credit cards often offer users rewards and savings, but CreditCards.com's surveys of retail credit cards consistently show they tend to charge higher rates. Even if a shopper gets a low initial interest rate on a card, failing to pay off balances can negate any savings.

"No reward in the world is going to outweigh you going further into debt," says Katie Ross, education and development manager with American Consumer Credit Counseling, a nonprofit debt management and financial education organization. "You end up spending more than you probably can afford, which results in you not being able to not be able to pay it back, or letting interest accrue on the purchase."

Bottom line: Shoppers signing up for cards that promise to save them money with discounts and coupons can lose the value of the rewards if a balance is carried on the card, especially if the card has a high APR.

2. It's simply too complicated. Some loyalty programs are so complex they require you to plan ahead like a chess grandmaster.

Take, for example, Walgreens' Register Rewards, a program that gives members coupons at checkout, good toward the next in-store purchase. To make it work, shoppers must follow these rules:

They must purchase a set amount of an exact product advertised in the weekly catalog.
Shoppers can earn only one Register Reward per promotion in a single purchase, but Walgreens allows the same item to be purchased for an additional coupon if rung up separately.
When attempting to redeem the reward, shoppers cannot use a coupon and a Register Reward toward the purchase of one product; only one of the discounts can be put toward the purchase.
Customers must present the paper Register Reward upon checkout, meaning they have to keep track of it long enough to redeem it, and remember to redeem it before it expires.

"If there are too many terms and conditions to earn something of value -- for example you have to shop on a Tuesday after 3 p.m. to get points -- consumers kind of shut themselves off," says Jeff Berry, research director with Colloquy.

Bottom line: Programs with too many qualifiers make you work too hard for the reward.

3. Reaching a reward threshold costs too much. Some stores have multiple membership levels. Spending a fixed amount will escalate your status as a shopper, earning you better rewards. Retailers such as Starbucks, Best Buy and Express feature membership levels as part of their loyalty programs. The Express program, Express NEXT, allows customers to earn $10 in rewards for every 2,500 points accumulated (or $2,500 spent). Customers who earn 7,500 points in a year become "A-list" shoppers, triggering $15 rewards, among other perks. Express gives one point for every dollar spent, meaning to earn A-list shopper status a customer would need to spend $625 a month at Express.

When earning rewards is that slow-going, customers might feel compelled to shop at a certain store even when they shouldn't, says Angela Colley, a freelance financial journalist. Restricting themselves to a single store just to meet the thresholds could cause them to miss out on savings at other stores.

Or they may just spend too much in the chase for points. Shoppers attempting to trigger their loyalty rewards tend to purchase more, according to a report called "For Love or Money? 2013 Consumer Study into Australian Loyalty Programs," commissioned by strategic marketing company Directivity and digital agency Citrus.

Bottom line: Attempting to create a shortcut to rewards with extra spending leaves you with a small reward for a big bill.

4. The rules change. You've been with this program since the outset. You've gone out of your way to shop within the rewards program and even took the time to master maximizing your points. You're only a few more purchases away from finally cashing in all those points. Then one morning you get up and the rewards terms have changed.

In early 2013, for example, Starwood, Hilton, Marriott, the Intercontinental Hotels Group and Wyndham hotel chains, all giants in the industry, restructured their loyalty programs, making points less valuable. For example, a room at the Hilton in Miami Beach, Fla., that cost 50,000 points a night jumped to 80,000 points. More than 220 million Americans were members of hotel loyalty programs in 2012, according to Colloquy's numbers.

"It's natural for customers to feel cheated or manipulated with fine print, but that's the world we're living in today," says Kenneth De Meuse, a psychologist specializing in loyalty programs and executive vice president of research and development for Tercon Consulting.

Bottom line: Loyalty programs can change the rules in the middle of the game. Don't stay with a program to cash in on savings if the new rules negate the reward.

5. You get bad customer service. Even for a program that offers streamlined and efficient rewards delivery, bad service can taint the experience. The best loyalty programs do not manage a program around products, brands and stores, but focus on individual customers, according Hanover Research, a global information services provider that advises organizations to help improve their effectiveness.

Bottom line: Don't shop at a store that isn't courteous, kind and attentive. While it's nice to earn rewards, the points you can earn shouldn't be enough to stick with a product that you're unhappy with. A dozen comparable products and companies are waiting to take your business and offer you a chance to indulge in their loyalty program.

6. They're over-mining your data. A common trade-off in the world of loyalty programs is for consumers to surrender personal information, such as product preferences, hobbies or future vacation plans, during the sign-up to get the program's goodies. If the store is sharing your personal info with a marketing partner or it's not using your data to your benefit, it might be time to quit the loyalty scheme.

Loyalty programs frequently sell data to marketing companies, which use the information to target members with mail, email and phone solicitations. Though some trade-offs are necessary, protect your personal information as much as you can. Instead of filling out every blank on the sign-up form, fill out the minimal amount of information required. If they ask for too much information, walk away. And if they ask for your Social Security number, run. No one should ask for it unless they're lending you money.

If you've given a loyalty program access to your data when you signed up for the program, the least it can do is use your data to your benefit. A store that tracks your purchases will know what you buy and when you're buying it. If you buy dog food every month, a store should use this information to offer you a coupon for more dog food or a bag of treats. If a store offers coupons that have nothing to do with shoppers' purchase histories, shoppers feel the communication is disingenuous, says Matthew Green, managing director for Emnos, a consulting organization working with retailers such as Target and Walgreens to analyze data from loyalty programs.

Bottom line: Stores should use customer data to improve their buying experience, whether through more personalized ads or relevant coupons. Hawking your phone number to some telemarketer isn't providing better service, it's "taking advantage of the consumer's data," says Jonathan Marek, senior vice president of Applied Predictive Technologies, a business analytics software company.

Make sure loyalty cuts both ways In short, blind loyalty isn't a virtue. Be aware when loyalty programs aren't working for your wallet.

"You must do things in your best interest," De Meuse says. "Be flexible, adaptable and willing to change. Look at the programs available and see what's in your best interest."