You have to balance rewards with interest rates and rules when signing up for credit cards and other rewards programs, Consumer Reportsrecently advised. In some cases, the restrictions on the rewards make them not worth the trouble.

If the interest rates on the credit cards are too high (and you carry a balance) you could spend more on interest than on what you’ll earn in rewards.

Consumer Reports offers these tips for using rewards programs:
Consider where you shop. Save your key ring or wallet space for cards that will earn rewards at stores you use most often.

Project your spending. Translate the amount you’re likely to spend into cash back or points, depending on the program. If it’s points, find out how many you need to get something you might want. If you’re using a credit card, subtract the annual fee, if any. If that calculation shows you’d have to spend a fortune to earn a pittance in rewards, you might want to use another card.

Favor cash back. You might never redeem your points, so at least you will get something. Plus cash-back cards tend to be more generous in their rewards, CR’s research has found.

Skip credit if you carry a balance. Rewards credit cards often charge relatively high interest rates, which will eat up your reward (and then some) if you carry a revolving balance. The issuer can also hold points hostage or stop adding to them if your payment is late.

Do the math on do-good programs. Cards that give your reward to a charity usually pay only about 25 to 50 cents for every $100 you spend. And you can’t write off the donation on your taxes. Both you and the charity might do better if you use a more generous rewards card, keep the money, and just write the charity a check.

Use airline miles fast. Cashing in frequent- flyer rewards has become more difficult because airlines have cut flights and now have fewer seats available. So rack them up and use them up as quickly as possible. Airlines also change their rules frequently, and several big carriers have recently gone bankrupt

Avoid temptation. Research has shown that people who use rewards cards charge more. It’s easy to overspend just to earn a new digital camera or set of golf clubs. Beware.

June 4, 2008.