Don’t ignore credit card rewards
For the most gain with least effort, focus on cash-back rewards. (Richard Drew/Associated Press/File 2012)
By Sarah Shemkus
Globe Correspondent

Credit card rewards programs can be confusing, to say the least. They often involve different percentage returns for different purchases at different times of the year. There can be blackout dates on travel benefits and variable exchange rates depending on whether you want cash back or gift cards.

The complexity can make it hard to figure out how best to wring the most value from your credit card use. It’s enough to make many consumers just stop trying: According to, 31 percent of credit card holders have never redeemed their points. Depending on the rate at which a card accumulates rewards, that could be as much as $50 going unclaimed for every $1,000 of spending on a card.

So for the average consumer, the most financially savvy way to approach credit card rewards is to try to keep it simple. For maximum financial gain with minimal effort, focus on cash-back rewards. Travel rewards can be a logistical nightmare, while gift cards are overly restrictive and only encourage you to spend more, rather than lowering debt.

For the greatest effect on your bottom line, be aware of whether a card comes with an annual fee just for the “privilege’’ of using it. There are plenty of no-fee cards out there. The Chase Freedom card, for example, doesn’t have a fee and offers 5 percent back on rotating categories of purchases, often including grocery stores, restaurants, and gas stations. Spend $1,000 on groceries over three months and you can collect $50 to put toward your credit card bill.

If you are considering a card with a fee, do the math before committing. The average annual fee for a credit card is $58, according to financial information site NerdWallet.

At a typical rewards rate of 1 percent, it would take $5,800 in spending each year to cover that fee. If you are not likely to do that much spending on a card, look for a better deal.

Of course, these calculations mean little if you are carrying a significant balance on your card. The average household with credit card debt pays more than $100 per month in interest, according to NerdWallet.

At a 1 percent cash back rate, you would have to charge $10,000 just to offset that interest. For most people, that’s not a formula for financial health.

As always, make it a priority to pay off your credit card balance each month.

Have a consumer question or complaint? Reach Sarah Shemkus at