Special Reports: Rewards Credit Cards Not So Rewarding

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This holiday shopping season, nearly every store and every credit card company wants you using their plastic. And to get you to do that, they're offering up free miles, free cash, even free coffee.

"I'm a shopper anyway. I'm going to spend it, so I might as well spend it at a store that's giving me something rather than the store that's not," says shopper Vicki Mansfield.

Mansfield certainly has her share of these so-called "rewards" charge cards.

"A lot," she says. "Fifteen? Twenty? Now it seems like everyone is doing the rewards. Anything my husband and I use pretty much has a reward."

She uses anything from the Costco American Express to Nordstrom accounts to airline charges.

"Sometimes I think I'm getting more of an advantage than they are," Mansfield says.

Not necessarily so, says MSU Federal Credit Union's Joyce Banish.

"Everybody wants to get something for nothing," Banish says. "In the case of rewards cards, you may think you're getting something, but you're really paying for that reward."

Banish says what these companies don't want you to know is that rewards cards are only useful for that rare person who pays off their balances in full every month. And with the average American carrying almost $9,000 in credit card debt, those people reaping the rewards are few and far between.

"Take for instance an airlines card," she says. "There's an annual fee of $55, the interest rate is 18 percent, and if you carry a balance, you're going to end up paying for that ticket."

Both Banish and Mansfield agree airlines rewards are the most popular. But don't plan on getting a free trip any time soon.

"Because you have to earn 40,000 miles, so you have to spend $40,000. The average consumer spends about $5,000 a year on a charge card, so that means it takes eight years to get that airline ticket," says Banish.

"It's getting harder and harder to redeem those miles," adds Mansfield.

Companies this holiday season have already begun inundating shoppers with commercials, E-mails and offers at the check-out counter. But Banish says it's important to know what you're signing up for before you get carried away by the promises.

"If you pay off your credit card every month, it really works to your advantage," Banish reminds.

But even consumers like Mansfield, who pays her balances in full monthly, are beginning to be wary of those sparkly rewards.

"I'm sure in some sense they're taking advantage of me and I don't realize it," she says, "because they wouldn't be giving these things away for nothing."

Nothing is free; that's an old adage credit card companies would like shoppers to forget as they head out shopping this Black Friday.