Credit Card-Linked Discounts: Creepy or Cool?

Extreme couponers take note – many companies are now switching from traditional paper coupons to credit card-linked coupons. This is great for news for trees, but is it great news for people too? What kind of risks does it pose risks for consumers?

Unless you’re a professional bargain hunter, coupons can be a pain. Finding deals means endless sifting through newspapers, junk mail and magazines. Sometimes all the trouble you go through to find them hardly seems worth the savings. It’s so easy to misplace or forget about them, and we’ve all been in line behind that person with 40 coupons who is both fumbling to find them and insisting on splitting the transaction into 32 different ones in order to get the best possible deal on a pair of purple skinny jeans or more spaghetti sauce than a family of five could eat in a lifetime.

With this in mind, RetailMeNot, the web’s premier coupon site, recently launched a card-linked discount app. Consumers either use the app or visit RetailMeNot’s website to select participating retailers that interest them. Next, they enter their credit card information. There’s no need to remember to bring a coupon or even to know there’s a discount available – customers simply pay with their credit cards and they automatically receive whatever discount is being offered. There’s no need to re-enter your credit card number within the app, either. RetailMeNot keeps it all linked seamlessly.

Sounds pretty sweet, right? Well, it sort of is, but it sort of isn’t. First, they’re trying to get you to spend more on your credit card. Retailers and credit card companies stand to profit from this, bigtime. “Oh cool, I can get 25% off at Sephora today? Perfect time to buy Eau d’Ridiculously Overpriced New Fragrance,” you might think. Pretty soon these little purchases add up, and you discover that you’ve spent way more than you intended to. Now you’re stuck with a bunch of stuff you don’t really need, and because you used your credit card to get the discounts, you’ve got a bunch of credit card debt too.

And here’s where it gets extra creepy – they’re tracking your data. Banks and credit card companies are well aware of the success of card-linked coupons, and they’re trying to take them a step further. Some banks have linked with retailers and they’re now allowing third-party data trackers to access general customer spending data so that they can send you offers they know you can’t refuse.

Suppose you make a lot of purchases at Sephora. Even if you haven’t opted into anything like RetailMeNot’s app, your card issuer might offer you a discount there if you pay with plastic. You might even get an email offering you a discount if you make a credit card purchase at Ulta (another cosmetics chain). Fortunately, third-party companies reportedly don’t have access to personal information. “We never pull individual transactions out of the bank,” says Lynne Laube, president of Cardlytics.

As we become more and more reliant on our smartphones – and therefore our credit cards – for shopping, it’s inevitable that this kind of marketing is going to become more prevalent. Luckily, there are still ways to avoid it. You can obviously choose not to use the app. And if your bank is participating in card-linked coupon programs, you can ask to opt out.