Is a 'rewards card' right for you?

5. Consider going the debit rewards route. You get fewer benefits with debit rewards, but you avoid the risk of running up debt. Credit-card programs typically give you one point or one mile for every dollar you spend, but the typical debit rewards program is one point or mile for every $2, says Chris Allen, senior manager at Dove Consulting. Some offer just one point for every $3.

Bank of America's "Keep the Change" is a hybrid program that combines a savings program with rewards. Debit-card purchases are rounded up to the nearest dollar, and the difference is put in the customer's savings account. For three months, Bank of America matches these savings. After that, the bank deposits 5 cents for every dollar saved this way, up to $250 a year. It's not a rich rewards program, but at least it encourages a low level of savings. [Editor's note: The original version incorrectly named Bank of America's hybrid reward program.]

6. Take the "merchandise or cash back" test. If you're considering merchandise rewards cards, get the card's catalog, find a cash-back card with similar terms, and see if you can get a better deal with cash back, says Arnold. There's a good chance you can.

"Any reward program tied to a catalog, where they're trying to give you free merchandise, historically – across the industry – has been a raw deal" for consumers, he warns.

And with cash back, you don't run the risk of creditors increasing the cost of merchandise, or whipping yourself into a buying frenzy as you flip through the rewards catalog. If you still can't decide, check out Chase's Freedom card, which lets you switch from points to cash and back without penalties.

7. Make sure you can cash in on rewards. Card issuers pay more to dole out airline miles than they do for all other types of rewards combined. But if you're not going to charge enough to get a ticket, or ticket restrictions make it hard to redeem your rewards, then you're better off with another card.

8. Look at "savings" cards. Some rewards cards help you put away savings or pay off debt. With the Citi Home Rebate Platinum Select MasterCard, holders can use points to pay down their mortgage. The Citi Upromise Credit Card uses points to save for college or for paying down certain student loans. But unless you charge your house on your Upromise card, there's little hope you'll put much of a dent in college education costs.

9. Consider charity. If you're feeling generous, donate your rewards to your favorite nonprofit. The Ducks Unlimited Visa Card, one of the first cards linked with a charity, has generated close to $65 million in donations in 20 years, says Philip Milburn, director of corporate relations at the wetlands' protection organization.

Ducks Unlimited receives donations every time someone signs up or renews the credit card, and for new purchases or balances held on the account. Check your card, though: Many credit-card companies allow you simply to donate rewards points to charity.

Arnold suggests that cardholders wanting to donate to charity should do some comparing: If you'd get more money with a cash-back card than the charity would receive from an affiliation card, then get the cash-back card and use the money you receive to write a check to the charity at the end of the year.

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