Paid membership versus loyalty points: which one is actually for you
These are usually presented as two flavours of the same idea. Structurally they are opposites, and the difference decides which one can be good for you.
Points are a private currency with one issuer
When a business gives you points, it creates a liability it controls completely. It sets what a point is worth, when it expires, what it can be exchanged for, and it can change any of those. The accounting treatment is instructive: unredeemed points are carried as a liability and the portion the business expects never to be claimed is called breakage — a number that is forecast, planned for, and counted as revenue.
A programme that expects breakage is a programme designed around you not using it. That is not a conspiracy, it is just the model. But it means your interests and the issuer's are opposed at the point where you try to redeem.
Three consequences follow. Your points can be devalued without anything happening that looks like a price rise. They expire, which is a quiet transfer back to the issuer. And they are hard to compare, because a point is not a unit of anything until the moment you spend it.
A paid membership inverts the risk
You pay first and receive benefits after, which means the business holds your money and owes you something. That is a worse position in one respect — you are exposed if the service degrades — and a better one in another: the obligation runs towards you, and it is denominated in something legible.
It also changes the incentive. A points issuer profits when you do not redeem. A membership business profits when you renew, and you renew when you have used the thing. For the first time the two of you want the same outcome.
Where each one is the right trade
Points suit incidental spending you were going to do anyway. If you fly a route your employer books, or shop somewhere for unrelated reasons, a free programme that accumulates something is strictly better than nothing, as long as you treat the balance as perishable and redeem early.
Membership suits concentrated, predictable usage. If you can say roughly how often you will use something, a fee that buys real access is usually cheaper than the same access bought piecemeal, and it is certainly more predictable.
Neither suits aspiration. The most expensive mistake in both categories is paying for the version of yourself who will use it more than you will. Points programmes encourage this by making a distant reward visible. Memberships encourage it by pricing on average usage.
The questions that matter for each
For points: when do they expire, has the redemption rate changed in the last two years, and what does the business reserve the right to alter unilaterally? The last one is in the terms and is usually broad.
For membership: what happens in the month I use it least, how hard is cancellation, and would I recommend it to someone who had not paid? The third question is the one that cuts through commitment bias.
The hybrid, and why it is usually the worse of both
A paid membership that pays out in points combines the upfront cost of the first with the issuer-controlled currency of the second. You are paying a fee for the privilege of accumulating something the business can devalue. Occasionally the maths still works. More often it is a membership whose benefits could not stand on their own, denominated in a unit that makes them hard to check.
A note on this site
Regal Club has no points, no tiers and no price. The reason this piece exists before the product does is that we would rather write down the standard first, while it is still cheap to be strict, than discover it after we have something to sell.