Bobby Johansen has flown many times for free, thanks to his Jet Blue Amex rewards card.
"If I make a lot of larger purchases, I generally do them on the Jet Blue card so that I can redeem as many flight points as possible," Johansen said.
Consumer Reports Money Adviser has sized up the best rewards cards. But Chris Fichera says be aware, they're only worth it if you pay off their balance in full each month.
"These cards generally have higher interest rates," Fichera warns. "So if you carry a balance, you could end up paying more in interest than you get back in rewards."
Also, you should watch out for hidden fees because 19% of rewards cardholders said they had increased fees for services like balance transfers, cash advances, and foreign transactions in the past year.
Also, scrutinize the fine print.
"Some cards have clauses that can make you lose out on points or cash back," Fichera said.
Take the Discover card as an example; It gives 1% cash back. But that drops down to 0.25% percent at warehouse or discount stores like Wal-mart.
"The Chase Freedom card can be good because it offers five percent cash back in certain seasonal categories. But since those categories change every quarter, you have to opt in every time, which can be a hassle," according to Fichera.
The Consumer Reports Money Adviser says one of the best cash back reward cards is the American Express Blue Cash. It doesn't charge an annual fee, and after spending $6,500 within a year, it offers 5% cash back at supermarkets, drugstores, and gas stations, and 1.25% elsewhere.
Several websites also compare cards so check them out. They include CardRatings.com, LowCards.com, and FrequentFlier.com. They helped Consumer Reports come up with a list of plastic that pays you.
Other recommended cards include American Express Costco True Earnings which offers 3% cash back at gas stations and restaurants, as well as the Capital One No Hassle Cash Rewards, which offers 2% cash back at gas stations and groceries.
Another good card is the PenFed Visa Platinum Cashback Rewards from the Pentagon Federal Credit Union, which offers 5% cash back on gas, 2% at supermarkets and 1% elsewhere, along with a good balance-transfer offer. You can join by paying $20 to the nonprofit National Military Family Association and opening a regular share account with at least $5. Members of the military and their families, certain government employees, Red Cross employees and volunteers are eligible for free PenFed memberships.
Even retailers are offering rewards cards, too. If you're a loyal customer, those cards can really pay off, too. Consumer Reports says a good one is the Amazon.com Rewards Visa card. It has no annual fee, pays $30 back on your first purchase, and points are unlimited and never expire.
But, because terms and conditions of most rewards cards change frequently, be sure to routinely check for updated terms
