Many customers got a poor experience with frequent flyer miles programs in the past when they found that it is very hard to redeem the miles and the whole effort is not worth the benefits. Credit card companies noted the grumble and promptly shifted to other incentives.  Now they try to offer something different, but their aim remains the same - to induce you to overspend on your credit cards.  Surprisingly, the customers are still willing to commit the same mistake once again.

It is a usual tendency of credit card companies to make things complicated.  So if a reward is offered, the fine print will tell you that such reward is limited to only specific brands or it will expire if you are unable to use it within a certain period of time.

The cash back, grocery and gas rewards cards offer relief for essential items.  However, such cards will often carry higher interest rates than traditional credit cards.  The rates will vary from 9.75 per cent to 19.99 per cent.

Naturally, the interest on your overdue balance will erase the benefits which these programs offer.  In addition to the complicated regulations, higher fees and higher interest rates, many customers often leave unused rewards.  A study shows more than 43 per cent of rewards collected by cardholders will never be used. Anyway, the consumers will not benefit at the end.

Remember the following tips to minimize these dangers and get the most out of your card:

You have to review your needs before applying for any program. Always go for cards which will offer redemption of rewards at stores or services where you visit most often.  If you're not a frequent traveler, rewards towards air travel and hotel accommodations may not be useful to you.

You need to project your spending pattern also.  If you are able to estimate your probable spending over a particular period, you can translate it into points or cash back.  You have to deduct the annual fee if any, out of that reward. If you conclude that you will be spending a more to get a small reward, turn down such offer.

You should always favor cash back because the rewards based on points may remain unused. Cash back will accumulate your benefits without any effort on your part.  Many studies have shown that the cash back cards will offer better rewards then the ones offering benefits on points.

Try to avoid using rewards credit cards if you will carry outstanding balance from time to time.  Such balance will carry a higher rate of interest rate and finally you will be paying much more in the form of interest than the actual rewards you earn.

Some cards will tend to offer the rewards to charity.  However the rewards are very less in numbers.  It may be a good idea for you to go for the cash back reward and then send money to a charity on your own!

If you are still going for the mileage program, try to use it right away.  The airlines will always change their redemption rules and then holding on to unused miles will cost you a lot.

The conclusion is - there is always a tendency to overspend to get points or rewards.  But over spending for "freebies" will never pay.

There are all sorts of financial decisions you take in your life. The most important amongst them is using credit cards. Do you really know the implications of selecting a particular credit card on the basis of rewards it offers? Chintamani explains in this article the fine prints for the rewards credit cards in the market.

Chintamani Abhyankar, is an expert in the field of finance and taxation for last 25 years. He has written many books explaining inside secrets of the magic world of finance. His famous eBook Stop donating your money to IRS which is now running in its second edition, provides intricate knowledge and tips on personal income tax.

Article Source: DesireToRetire.com We have the internet's best retirement calculators!  Click here to try them out.