The Best Rewards Cards

If you like the idea of earning a little something extra each time you pull out your plastic, have we got a credit card for you.
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With the economy in free fall you may think you're better off cutting up your credit cards. But here's another idea: When you do use a credit card, try to get the most out of it. That means using cards that reward you, whether with airline miles, or retailer gift cards or cash back. "If you pay your credit card bill in full each month, you definitely should use a rewards card," says Marcia Brixey, author of The Money Therapist: A Woman's Guide to Creating a Healthy Financial Life. One caveat: Don't get a rewards card if you carry a balance or are in debt. These cards tend to have higher interest rates than other cards, which can negate the value of rewards. We've pulled together a primer of cards -- and how to use them wisely.

Get Cash Back

How it works: After you reach a minimum spending threshold, which can range from $5 to $2,500, cash-back cards let you earn back money -- sometimes 2 percent on groceries and gasoline and 1 percent on other purchases. Some cards automatically issue a credit in the amount you've earned to your statement, some mail you a check; others let you decide how you want to redeem the award.

Best for: Anybody who doesn't carry a balance, but get a card that fits your spending habits. Blue Cash from American Express may be ideal for folks who charge at least $2,000 a month -- which might not be a big stretch if you can use the card to pay household expenses, such as rent, utilities, gym memberships, and cable. Blue Cash gives 1 percent back on everyday purchases (grocery, gas, and drugstore) and 5 percent on other purchases for the first $6,500 that you put on the card annually. Once you hit $6,500 the percentages jump to 5 for everyday purchases and 1.5 for everything else for the rest of the year. If you charge less than $2,000 a month, the non-tiered Chase Freedom Card may be a better bet since it offers 1 percent back on all your purchases and 3 percent back on gas and groceries (or a $50 gift card after the first use). And the card automatically applies your cash rewards to your next statement.

Fine print: Make sure there's no annual fee; no cap on spending or rebates; no expiration on cash rewards. When you use Blue Cash, you accrue the rewards during the year -- but if you're more than 90 days late on a payment you lose all your cash back!

Continued on page 2:  Get Free Stuff


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