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Money Fix: Smart credit-card rewards

Smart credit-card rewards can be hard to find.

Smart credit-card rewards can be hard to find. Credit: iStock

Sometimes perks aren't as important to people as they seem.

In a survey, 40 percent of those polled said convenience was the biggest reason they use credit cards, but only 19 percent said earning rewards. Just over half said if their credit card issuer eliminated all the points, cash back and other goodies, they would use the card as they always had, while 26 percent said they would use the card less often and 19 percent would stop using their card.

While you don't want to chase rewards, don't miss opportunities. The best cards offer reward rates of around 5 percent.

It all adds up. "Everyone should use rewards credit cards. At worst, you'll get an extra 1 percent value out of every purchase you make; this goes a long way," says Robert Harrow, research analyst with ValuePenguin in Manhattan. "It's fantastic that I keep charging purchases to my credit card and after a while I get a free airline ticket. That's something paying with cash or a debit card can't provide me."

Jacob Lumby, founder of Cash, and his wife amassed more than 2 million airline and hotel miles in 18 months from credit card sign-up bonuses. They travel extensively. Next up: a two-week trip to Thailand flying first class that will cost only $100 in airport taxes.

As always, be cautious. "Use these cards if you'll pay your entire statement balance in full and on time," says Chris Mettler, president of Compare Otherwise, interest payments eat into your profits.

Do the math. Says Melville financial attorney Leslie Tayne, "Steer clear of buying products from credit card rewards programs. Often the points required to buy them cost more than if bought in the store."

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