QUINCY (CBS) – Reward cards sound like a great idea. Just use your credit card like you always do, but earn points or cash back in the process.

These cards can work for you, but only if you have the right strategy.

Jen Larson of Quincy likes to shop on her lunch hour.  Getting rewards on her credit card makes it even better.

“I love it. It’s an added bonus,” she said. “It’s a good way to get an airline ticket with purchases I make anyway.”

After contracting during the recession, the credit industry is coming back.  At the end of last year, credit card offers were up 206% from the same period in 2009.

Many of them come with enticing reward programs.  Marketing executive Glenn Kelley of Kelley & Cohorts said it’s really important to compare all the details of these programs.

WBZ-TV’s Paula Ebben reports.

One place to start is by examining the interest rates. “Rewards credit cards carry higher interest rates. Consumers have to be careful that they might get 1% in cash back or some rewards, when they really need to do the math and compare what their interest rate is versus other types of cards,” said Kelley.

There’s also the annual to watch out for according to Consumer World’s Edgar Dworsky.

“I would never pick a rewards card that has an annual fee. Now with the pressures that banks are under to find other sources of income, more rewards cards are going to have fees.”

Sometimes a card will forgive the fee as an introductory offer.  That means you have to be vigilant the second year to make sure it isn’t just tacked onto your bill.

The rewards can sound good, but make sure you’ll really be able to redeem them. “A lot of these cards put expiration dates on them,” said Kelley. “So as you are accumulating points, you want to be careful to make sure that you use the points before they expire.”

New research shows that the idea of getting something we perceive as free can cause us to make bad financial decisions.

A new study by the Federal Reserve Bank of Chicago found that shoppers with new rewards cards, in the first three months, spent $79 more each month and accumulated $191 in debt.  This was to earn a $25 reward.

Dworsky cautions, “You don’t want to overspend on these cards just because you are getting a reward.” A shopper has to be smart to come out on top of this game.

Dworsky explained, “You just mentally think, I am making a purchase at the gas station, I am making a purchase at the supermarket, which card in my wallet is going to pay me the most?  Then you have to remember to pay off your bill at the end of the month.”


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