Credit Cards

The Best and Worst Retail Loyalty Programs for the 2018 Holiday Season

Discover the most (and least) rewarding places to shop this holiday season.

With the winter months in sight, consumers and companies alike are preparing for the annual holiday shopping season. Roughly four out of five consumers plan to spend the same amount of money or more than they did last year, and research projects that the average holiday spend on gifts, meals and experiences will exceed $1,500 per consumer. We know that retailers benefit from the year-end spending bonanza, but what about consumers?

To find our answer, we put the country's biggest apparel retailers under the microscope and examined their customer loyalty programs. Which companies reward consumers the most per dollar? What are the most enticing perks offered to lure in high rollers? And, for the average spender, which program provides the best continuous value?

The Best and Worst Loyalty Programs for the Average Shopper

For the average consumer, we looked at loyalty programs across 12 department stores and rated them on rewards rate, discount flexibility, free shipping for members, credit card benefits and extra perks, which include bonus points, special events, birthday gifts and reward point flexibility.

The best and worst shopping loyalty programs

The top three loyalty programs provide a 5% rewards rate on purchases with the store's co-branded credit card. This means that consumers get 5 cents in cash back store credit for each dollar spent at a retailer. This is an above-average return when compared to general credit card rewards rates, which are usually 1% to 1.5% on retail purchases.

In contrast, the worst loyalty programs have a 0% rewards rate for shoppers who don't have the store's credit card and a low rewards rate for those who do. For example, Neiman Marcus only provides a 2% rewards rate for cardholders who spend under $1,000 per year. While we found that Neiman Marcus is the unrivaled best option for ultra-high spenders, gaining access to benefits of the loyalty program is prohibitively expensive.

It's important to note that while Saks is one of the worst loyalty programs for rewards on spending (and, ultimately, saving money), it offers free shipping on all orders with no minimum purchase. You won't get great long-term value from the SaksFirst program—but if you can find an affordable item on their online store, it's worth using the retailer for the free shipping.

1. Kohl's Yes2You: High Rewards Without the Store Credit Card

Kohl's is the only retailer to offer a 5% rewards rate to all customers, regardless of whether they pay with the store's charge card. JCPenney and Bealls also offer 5% rewards rates—but only to consumers who pay with a co-branded card. As such, Kohl's takes the number one spot for having both the most rewarding and most inclusive rewards system.

Points are also relatively easy to earn and redeem in the Yes2You program. Shoppers earn one point per dollar on all purchases, and a $5 store credit is issued once 100 points are earned. Compared to its competitors, Kohl's has an average points expiration policy: accounts are valid until 12 months without any account activity.

The one downside of the Kohl's Yes2You program is that members don't get free shipping, even if they spend hundreds annually with the company. Some retailers give free shipping to all loyalty members (e.g., Bloomingdale's), while others require a minimum spend of a few hundred dollars for the perk (Macy's).

2. JCPenney Rewards: 5% Rewards Rate for Cardholders

JCPenney Rewards comes in second place, primarily for its above-average rewards rate. Shoppers who use the store's co-branded credit card get a 5% return on their purchases, tied for highest with Bealls and Kohl's. Without the store card, shoppers get a 2.5% return on JCPenney purchases. A $10 store credit certificate is dispensed for every 200 points earned.

Besides the points-earning potential, JCPenney's loyalty program is fairly limited unless you sign up for the store credit card. Cardmembers who reach Gold tier ($500 annual spend) or Platinum tier ($1,000 annual spend) have access to rewards like coupon passbooks, Sephora bonus points days and exclusive sale prices. Consumers without the card are only eligible for a few lower-valued benefits, like birthday gifts and bonus events.

3. Bealls Coast2Coast Rewards: A Regional Retailer with Competitive Rewards

Bealls, the Florida-based retail chain, offers a solid, no-frills loyalty program for value-seeking consumers. Like at JCPenney, cardholders earn a 5% rewards rate and other consumers earn 2.5% on purchases. A $5 rewards certificate is issued after 200 points are earned, and rewards are valid for 60 days after being issued.

For shoppers in Florida and the surrounding Southeast, Bealls is a great choice for in-store holiday shopping. There are likely better choices for online purchases, however, as free shipping is only available on purchases of $75+.

Honorable Mention: Gap, TJX and Century 21

The three retailers mentioned above consistently offer the highest rewards rate on store purchases, but there are a few other stores with competitive loyalty programs.

Although Gap doesn't have a widely available loyalty program, its GapCard provides a 10% discount on all purchases across the Gap family of brands, which includes Athleta, Banana Republic, Hill City and Old Navy. This discount is one of the best store credit card perks around. Plus, cardholders enjoy a 5% rewards rate on all Gap purchases.

TJX ties for the highest rewards rate for cardholders at 5%, but failed to make the list due to its 0% rewards rate for general shoppers. For co-branded cardholders, Century 21 offers the second highest rewards rate on store purchases at 4%; general shoppers earn a 2% rewards rate, which is competitive but lower than Kohl's, JCPenney and Bealls.

The Most Rewarding Premium Loyalty Programs: Nordstrom and Saks

From free fur storage to valet parking and in-store dining, premium retail loyalty programs put an emphasis on offering the most comprehensive set of shopping services possible. Of these high-end programs, Nordstrom provides the best services for loyal shoppers, and Bloomingdale's has the most rewarding points-earning structure.

High-end department stores like Nordstrom and Saks Fifth Avenue have loyalty programs that reward shoppers for spending upwards of $10,000 to $20,000 dollars. At Saks, those who spend between $10,000 and $25,000 are bestowed with Platinum status, which comes with complimentary valet parking, free storage of one fur, a dedicated Diamond concierge phone number and six points per dollar on all Saks purchases (regular members earn a meager two points per dollar).

Nordstrom's top-tier shopper status—called Icon—is equally as rewarding for shoppers who meet a $15,000 annual spend threshold. Icon status members get unlimited free alterations, free same-day delivery, a complimentary dining or spa experience and four double-points-earning days. One of the more unique and enticing perks of Icon status is a service billed as Nordstrom After-Hours, which allows Icon members to shop in private after stores close.

Compared to the offerings of Saks and Nordstrom, the service benefits of the Bloomingdale's Top of the List program are modest. Top of the List requires a $3,500 annual spend and rewards its members with unlimited complimentary gift wrapping, special event invitations and a free entrée and nonalcoholic beverage at a Bloomingdale's restaurant (only if they spend at least $100 at the restaurant with a Bloomingdale's credit card).

The most rewarding part of Bloomingdale's Top of the List, however, is the points-earning potential: four double-points days on top of four points per dollar on general Bloomingdale's purchases and eight points per dollar on shoes, cosmetics and fragrances.

The Most Exclusive Loyalty Program in the World: InCircle at the Neiman Marcus Group

For those who spend upwards of six digits on clothes per year, the Neiman Marcus Group—which includes Neiman Marcus and Manhattan's Bergdorf Goodman—has a loyalty program that goes above and beyond the offerings of Bloomingdale's, Nordstrom and Saks. The program, called InCircle, has eight different elite status tiers for shoppers at various spending levels. Membership into the program is contingent on holding the store's private-label credit card.

InCircle TierAnnual Spend
Circle One$0 - $999
Circle Two$1,000 - $2,499
Circle Three$2,500 - $4,999
Circle Four$5,000 - $9,999
Circle Five$10,000 - $34,999
Circle Six$35,000 - $74,999
President's Circle$75,000 - $599,999
Chairman's Circle$600,000+

Ultra-high-end shoppers have their own set of perks. In the Chairman's Circle, reserved for those who spend over $600,000 a year at Neiman and Bergdorf, the long list of shopper perks includes in-store dining, valet parking, shoe and handbag upkeep, alterations, monogramming, precious jewelry upkeep and engraving, eyeglass frame and delivery service, local courier delivery and salon services. Shoppers in the Chairman's Circle also have access to complimentary travel planning and an InCircle concierge service, which can help members get tickets to exclusive events and reservations to vaunted restaurants.

In the lower tiers of the InCircle program, spending rewards are similar to those of other department store rewards programs. Members of Circle Two, for example, get two points per dollar and a $100 Point Card for every 10,000 points earned. In addition, the auxiliary benefits for low-tier members are similar to those offered by mid-market department stores: Shoppers who spend $1,000 and more get access to member-only events, free two-day shipping on online purchases and a "Day of Choosing," where they can earn double points on all purchases.

The Contenders: Upscale, Discount and In-Between

For this report, we selected 12 national and regional apparel retailers that represent a cross-section of American consumerism: luxury outlets, department stores, discount chains and one proprietary clothing conglomerate, Gap, Inc. Our research uncovered three trends across the majority of consumer loyalty programs, regardless of a retailer's brand positioning.

First, consumers are rewarded more for putting their purchases on a store's co-branded debit, credit or charge card. Second, the maximum rewards rate (think, the discount or cash back given on each purchase) is rarely more than 5%. To get a higher return, most programs require consumers to spend over $1,000 in a calendar year. Third, loyalty programs don't provide continuous value to the average consumer; beyond occasional discounts, the most rewarding benefits, like free shipping with no minimum purchase, are reserved for co-branded card holders who spend more than $1,000 a year on store purchases.

We also discovered that luxury retailers have exclusive elite status tiers for their highest spending clientele. While department stores and discount chains focus on giving customers monetary value—i.e., consumers earn points that they can redeem for discounted merchandise—upscale retailers go beyond the points to provide esoteric benefits like travel planning and complimentary fur storage. Luxury retailers also give discounts to their loyal customers, but their elite status programs are primarily devoted to providing lifestyle services.

Here's the full list of loyalty programs that we examined:

  • Bealls Coast2Coast Rewards
  • Bloomingdale's Loyallist
  • Century 21 C21STATUS
  • Dillard's Rewards
  • Gap's GapCard and BRIGHT Rewards
  • JCPenney Rewards
  • Kohl's Yes2You
  • Macy's Star Rewards
  • Neiman Marcus & Bergdorf Goodman's InCircle
  • Nordstrom's The Nordy Club
  • Saks Fifth Avenue's SaksFirst
  • TJX Rewards
Yowana Wamala

Yowana is a Junior Research Analyst at ValuePenguin, specializing in travel and rewards programs. He previously covered mortgages and banking for the website before graduating from Columbia University with a B.A. in Political Science.