Rewards cards can benefit you, but heed the fine print

Sun Sentinel (MCT) - Denise Soto has found a way to save money every time she buys gasoline with her credit card.

The Pembroke Pines, Fla., resident uses her Costco reward card, which gives her cash back on store purchases. And with her American Express card, she earns mileage that she uses to travel.

"Every year, Costco puts some items on sale, and they allow you to use the cash you earned to buy them," said Soto, who is an assistant for a health insurance company. "I got a little oven last year and I paid $10."

Consumers are looking for ways to spend every dollar wisely as the economic recession deepens. A recent survey by Standard & Poor found a growing number of Americans are using credit cards to buy necessities such as gasoline and groceries while cutting back on buying luxuries with credit cards. And the credit card industry is aggressively promoting reward cards offering cash back for gasoline purchases and other rewards.

It's unknown if more Americans are using reward cards than in years past. But a recent survey found that as many as 70 percent of all credit card transactions include reward cards, said Brian Riley, research director for bank cards at TowerGroup, a research firm that tracks consumer credit card spending.

Experts in the credit card industry say reward cards can be a smart option to help stretch your dollars, but only if you are careful about paying off your debt every month.

"I think they are a great deal," said Curtis Arnold founder of CardRatings.com, a credit card comparison site. "And we know that gas prices will probably be back up."

Bill Hardekopf, CEO of LowCards.com, a Web site that posts and analyzes credit cards, said consumers should consider their lifestyle and spending habits before choosing a card.

"The question is, which reward card gives you better value for each dollar spent? That's what you need to determine," Hardekopf said.

Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc. in Fort Lauderdale, advises consumers to buy gasoline with cash or debit cards because gas cards tend to have higher rates than traditional bank credit cards.

Reward or rebate cards, offered by financial institutions and petroleum companies, allow cardholders to accumulate points in exchange for a gift card or cash back. Savings vary according to the type of credit card.

Consumer advocates say the most popular gas rebate cards allow users to apply their points to products other than gasoline _ such as groceries _ to maximize their earnings.

Here's a look at how some of the most popular cards compare:

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Hess Visa Platinum card: Has an introductory rebate promotion that offers a 10 percent rebate on all Hess gasoline merchandise and food purchases within the first 90 days. But to get the rewards you must buy gasoline at Hess, Hess Express and Wilco Hess.

Shell rewards card: Issued by MasterCard and Citi Bank, the card offers 5 percent rebates on Shell gasoline and Jiffy Lube purchases. But rebates expire if you don't redeem them within 12 months.

Costco TrueEarnings card: Issued by Costco and American Express, the card gives holders 3 percent cash back for fuel purchases including a $25 statement credit with the first purchase. But you need to be a Costco member to buy gasoline.

Exxon/Mobil rebate card: Issued by MasterCard and Citi, the card allows holders to earn 15 cents back per gallon.

Doug Miller, a senior analyst at Corporate Insight, a market research and consulting firm, said universal reward cards are another option because they allow consumers to purchase gasoline at any gas station _ and other items, as well _ and reap rewards. But the cards have limits.

Discover Open Road offers 5 percent cash back on gasoline and auto maintenance purchases and 1 percent for other purchases.

The Capital One No-Hassle Points Rewards allows holders to earn 2 points per dollar spent at grocery stores, gas stations and drug stores and 1 point per dollar on all other purchases.

If you decide to get a gas or reward card, read the fine print to make sure you understand the terms and conditions for the program. Also be aware that some cards require an annual fee. You must pay the balance every month or, like any credit card, you can find your debt overwhelms the benefits.

Make sure you know how to claim your rewards on some cards. Some deposit rewards automatically in your account. Others send a gift card. And some cards require that you call the bank to redeem rewards. And be aware if an expiration date is attached.

Miller said many gas brand cards offer good deals but require you to buy gas from select gas stations.

"It won't give you as much flexibility," Miller said. "But it would give you a better return."

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(Sun Sentinel staff researcher Barbara Hijek contributed to this report.)

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© 2009, Sun Sentinel.