This paper encompasses various facets of loyalty programs and is aiming to determine its relationship to customer loyalty. The paper will try to answer the following questions: are loyalty programs profitable to implement, why some companies have loyalty programs that are effective and efficient, as well as increase profits, while other companies do not use those established models; why loyalty programs can negatively affect business operations, what are the advantages for customers of implementing loyalty programs, etc. Loyalty cards, as well as CRM (customers’ relations management) developed because the entire industry has transferred from product oriented marketing to customer oriented marketing The paper analyzes various formats of loyalty programs - from airlines which introduced loyalty programs, through newspaper discount coupons, loyalty cards such as DM Active Beauty, to mobile applications such as Starbucks Rewards program which offers discounts even to products bought outside Starbucks Coffee Shops. With development of loyalty programs, there has been an increase of fraud related activities. This paper touches upon fake discount coupons that circulates the US market, such as Walmart coupons. Fake coupons can be easily recognized through often unrealistic discounts, especially around the holiday season, and the aim of these frauds is personal data collection that is later abused. There are 8 different ways to collect points in loyalty programs which this paper covers in detail. Some are based on points earned through spending, some are based on VIP membership clubs, where members pay a monthly fee in order to be offered discounts, gifts with purchase and other benefits. Although this paper shows that loyalty programs can be profitable if they are well implemented, there are reasons not to implement them as well. CRM is customers’ relationship management system. Customer behavior data is collected through loyalty cards. By correctly analyzing data it is possible to find out important information – which products are bought in which periods, what amount is bought, who is buying what, and that information can be used to optimize business processes and supply chain, in order to maximize profits. As competition increases, and customers become more and more demanding, companies are fighting to attract new customers. Value delivered to consumers has a very important role in that battle. Paper lists examples of loyalty cards in Croatian market such as BIPA, DM Active Beauty, Bio & Bio and Multiplus card. Multiplus is a special category, because this is a card that can be used with different retailers – points earned at one retailer are redeemable at the other. This paper includes a research – an online questionnaire. Aim of this questionnaire is to find out what student population thinks about loyalty programs. Majority of respondents is familiar with loyalty cards and uses them regularly to earn points and get discounts. Majority of respondent believe that loyalty cards do not affect their purchasing decisions and behavior, but that they are profitable for companies.