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Kevin O'Leary, the entrepreneur and investor known as Mr. Wonderful from “Shark Tank,” recently shared his thoughts on loyalty programs, describing them as a losing game for consumers.
“Loyalty programs? Don't fall for the hype. Points are inflating faster than the dollar,” O’Leary wrote on X recently.
Why O'Leary Cashes Out Quickly
In the same post, he shared a video in which he elaborated further. "Loyalty schemes and point systems. Worthless, worthless," he said. "The inflation in points from airlines is absurd. Just look at what you got 12 months ago for what you get now."
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O'Leary claims that loyalty points, which many consumers accumulate in hopes of earning free flights or other rewards, have lost significant value over time. "People think, oh, I’m going to amass loyalty points. I’m going to fly to Hawaii. You find out that two years ago, it was 30,000 points. Now it’s 170,000 points. There’s nothing you can do about it."
Instead of hoarding points, O'Leary's strategy is to cash them out as soon as possible, taking advantage of any opportunity to spend them before their value drops further. He suggests using them for goods and services wherever possible, like on Amazon (NASDAQ:AMZN), to avoid being caught in the cycle of point inflation.
"I sign up for every single loyalty program, every single one, any retailer, and I blow them out the second I get them," he said. "If you’re a sharp consumer, you can save about two and a half percent of your entire costs every month by just playing the game right."
Trending: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.
The Drawbacks of Hoarding Points
This approach contrasts with the more traditional strategy of trying to maximize credit card rewards over time, which can be effective but requires financial discipline, strong credit, and careful organization.