What's in your wallet? If you're a typical American, you have at least three credit cards in there, according to the Federal Reserve Bank of Boston.

What's in your wallet? If you're a typical American, you have at least three credit cards in there, according to the Federal Reserve Bank of Boston.

Vast swaths of credit cards now offer some sort of rewards program. If you've held onto any of your cards for years, it might be time to review the rewards and your interest rate, and possibly shop for a new card if you aren't getting the most for your dollars.

Credit-card rewards programs have overall become less generous since the recession, said Ben Woolsey, president of CreditCardForum.com: "The dilution in value is obscured because it appears on the redemption side rather than the earning side. It costs more miles or points to get a flight, hotel night or piece of merchandise."

The change has been "largely invisible to the consumer on the front end," he said.

That means it's time to do some homework and find out if you're getting the rewards you think you are, and if not, to shop for a better deal. You should also assess your rewards: Are they meaningful and useful to you? Then, compare cards to find the one that will pay you the most points for the least hassle, Woolsey said.

When shopping for a card, "determine which type of reward you find most appealing - cash back, points or airline miles. Points are generally the most flexible, as they can often be redeemed for gift cards, hotel stays, airline flights or merchandise," Woolsey said. Then, "Examine your spending patterns to see if cards that provide extra rewards for certain categories might make sense compared to ones that offer more of a fixed return on all spending."

Sometimes, the most lucrative cards come with an annual fee. But "These fees can be easily justified if the person earns back rewards above and beyond the cost of the annual fee or the card simply offers some kind of annual bonus that offsets the cost," Woolsey said.

As for travel cards, it's getting harder and harder to redeem points for flights. You might be better off using money earned from a cash-back card to pay for airline gift cards or flights instead.

Once you have earned the rewards, don't forget to cash them in. "It seems silly but many consumers use their cards faithfully, accrue large amounts of rewards points and then forget to claim them," said John Ulzheimer, president of consumer education at CreditSesame.com. He cashes his in every year around Christmastime, to help with the holiday budget.

When you do cash in, aim for a value of at least one penny per point, Woolsey said. "Many make a game of this and often can get a much higher value based on carefully choosing their program's travel or retail partners along with researching the market value of whatever their redemption option is."

These folks tend to get much better deals than more casual users.

There is a caveat to the rewards game. If you carry a credit-card balance and pay interest, don't try to play. Instead, concentrate on paying off the card.

"The biggest mistake is spending more than your ability to repay in full each month in an effort to maximize rewards, as interest charges are generally going to be higher than the value of any reward earned," Woolsey said. "It's been proven that people spend more on credit cards than when using cash, and that people spend more on reward cards than credit cards without rewards, so consumers need to be aware of that psychological effect and avoid spending beyond their means."

But, if your credit is good, you might reap additional rewards.

"Many cards offer large cash-back bonuses for new cardholders after they meet a relatively low spending threshold," Ulzheimer said. "Other cards offer zero percent on balance transfer fees, new purchases and interest for up to 18 months."

If you like the convenience of plastic but not the specter of debt, you might try a rewards debit card. The perks will never be as generous as those attached to a credit card, but hey, it's better than earning nothing, right?


Denise Trowbridge is a self-professed money geek who writes about personal finance, banking and insurance for The Columbus Dispatch, bankrate.com and middlepathfinance.com.