The content is accurate at the time of publication and is subject to change.

Research: How to avoid getting swindled with credit card reward programs -

A lot of credit card companies offer varying rewards schemes these days with the intention to lure more customers. While many of these reward schemes actually make good financial sense, a lot of them can make you lose a lot of money if you do not think about it in advance. This is because the reward schemes will almost always require an annual fee, in order to take advantage of the program that is being offered.

The common reward programs involve a point`s based system. The more you spend in dollars, or the more times you swipe your card, the more points you will earn. You can use these points to get cash back into your attached account or gifts from a catalogue that will be provided to you by the bank. It is better to go for the gifts as it will amount to a lot more in dollar value.

The thing to remember, is that if you do not use your credit card often, then you will end up losing more than what you are paying for the credit card annually. The annual fee may be around $25 for such an offer, so if you do not use your credit card for at least a $300 purchase every month, you end up not making up for this amount. It`s not only about using your credit card regularly; it is about using it at the right places. Only a few stores are affiliated to the bank, and only these stores will offer the rewards points. If you do not make your purchase at those stores, you will not earn any reward points.

You also need to remember to pay off the dues every month by the end of the grace period. If you do not pay by this time, your credit score will suffer. Along with this, you will also have to pay a huge amount of money to the bank in the form of interest. This can work out to a large amount, as credit card interest rates increase up to 20%.

Along with these points based system programs, there are other reward schemes like air miles schemes and gasoline miles schemes. If you go for an air miles scheme, you can earn air miles for every transaction that you make, for every dollar that you spend. Again, this is of no use if you are not going to travel in the near future. These reward points will have a validity period within which you need to use them, failing which they will be forfeited. If you do not have time to travel due to work commitments, then you will find that this is a wasted investment. For the gasoline miles program, you need to use your car more often and not just for weekly commutes for it to work out. Travel agencies are one type of users who get to take maximum advantage of this scheme.