saving money with credit card rewardsThe holidays are one of my favorite times of year to give myself a gift—rewards from my credit card purchases. These rewards add up over time and help our family save money on travel, merchandise, and gift cards.

Our family tends to puts a little extra money on our cards during the winter months to purchase holiday presents. At the same time, the two rewards credit cards we use often offer extra shopping incentives during November and December, such as double-cash-back rewards for making purchases at certain big-name websites or chain stores.

It’s a win-win for our family—gifts for loved ones and extra cash back for us.

Six things to remember about credit card rewards

As you probably know, rewards credit cards come in many different packages. Some cards offer points toward airline ticket purchases or hotel stays; others give you points or cash-back options you can use to buy merchandise or gift cards, get cash, or pay off your balance.

It can take a bit of shopping and comparing to find the right rewards card for your family. Check out websites like Creditcards.com and Nerdwallet.com for help. (Full disclosure: I occasionally write for Creditcards.com.) Once you find a rewards credit card that you like, make sure you’re getting the most out of it by keeping these six tips in mind:

1. Be cautious about chasing rewards. Most of us have done it—and lived to regret it. It’s easy to get in trouble when your credit card issuer offers you tempting bonus rewards if you make a certain number of transactions per month or hit a certain spending goal.

Those rewards are fine if they match your regular spending patterns. If, however, this type of incentive causes you to put more money on a rewards card than you normally would—or to buy things that are more expensive than you’d normally choose—it means you’re letting the rewards take control of your finances. And it’s just not worth it.

2. Don’t carry a balance. Think about it: If you don’t pay off your rewards card balance every month, you’re undoubtedly paying interest and fees that negate any rewards you’re earning.

Your best plan of action, of course, is only to charge what you can actually pay off every month. But if you must carry a balance on a credit card, make sure it’s on a card with a low interest rate (and keep in mind that rewards cards often have rates that are slightly higher than non-reward credit cards).

3. Know your spending patterns. Some cards offer better rewards for purchases of gasoline or groceries. Cardholders with long daily commutes or big families would score nicely with these cards. Our family doesn’t drive much, and we’re fairly frugal about our food purchases, so these cards don’t appeal to us.

Likewise, someone who travels regularly for business might appreciate a rewards card that focuses on hotel stays and airline miles. Know how you spend your money in order to pick the card that works best for you.

4. Think carefully about annual fees. There’s no hard-and-fast rule, but you’ll almost always be better off if you can find a rewards card that doesn’t charge a fee. For example, if your card charges a $70 annual fee and offers rewards of 1 percent to 3 percent cash back, you’d have to charge $2,333 to $7,000 per year just to break even. You’d have to charge even more than that to earn any real cash-back benefit from the card.

5. Compare the costs of your redemption choices. Card issuers don’t always make it easy to figure out what’s the best deal when you’re ready to redeem your rewards for miles, merchandise, gift cards, or cash back.

In general, I’ve found that merchandise tends to be the worst deal. Depending on the card, targeted redemptions often offer the best deal—like airline miles from an airline-branded card. Gift card purchases are usually the next-best deal followed by statement credits and cash back.

6. Use all credit, including rewards cards, wisely. If you’re planning to apply for a mortgage or car loan in the next few months, you might want to wait to open a new rewards credit card account because doing so can temporarily ding your credit.

On the flip side, if you find a rewards card you love so much that you’re charging it up to your credit limit each month, consider opening a second, different rewards card and splitting your spending between the two accounts. By doing so, you’ll utilize your available credit in a more balanced way—a factor that can positively affect your credit score.

Teri Cettina is a mom of two daughters and freelance writer who specializes in personal finance and parenting topics. She blogs at Your Family Money. Follow her on Twitter: @TeriCettina