By DAVE CARPENTER
AP Personal Finance Writer
CHICAGO (AP) - This has truly been a golden era for credit card rewards programs.
Card issuers have been dangling rich offers of points, miles and cash back for the past year and a half or so in the quest to improve revenue and profit.
The targets of this fierce competition: customers with good to excellent credit records. They are the best kind to have in a stodgy economy, especially in the wake of the CARD Act that cut back on the fees that companies can pocket.
More than 60 percent of all credit-card offers include some type of reward, according to Brian Riley, a senior research director at research and consulting firm CEB TowerGroup.
But it's been the size and availability of some of the biggest incentives ever that have titillated rewards program junkies. Airlines have offered as much as 100,000 miles when customers spent a required amount on new cards. Bank cards have offered $200 cash back for spending $500. Another gave $250 in gift cards when customers spent $1,500.
Specific rewards come and go, and have been scaled back somewhat in recent months. Concerns also have arisen that the pending settlement between Visa and MasterCard and retailers could cause a pullback in rewards programs. That's a potential consequence if retailers impose bigger surcharges on rewards-cards purchases, which cost them more in transaction fees.
But it's just as likely that the card companies will step up their rewards efforts again, especially after two straight months of declining credit card use.
"There are millions and millions of points and miles out there for free, basically," says Brian Kelly, founder of ThePointsGuy.com, a site with information and tips about airline miles and credit card points. "You just have to figure out what you want and go after it."
Here are important points to keep in mind in sorting out reward cards and how to use them:
1. THEY'RE NOT REWARDS IF YOU CARRY A BALANCE.
If you can't pay off your card every month, steer clear of rewards cards. All you'll do is help subsidize the program with the interest you pay. Remember that these cards already carry interest rates that typically are higher than those of other credit cards _ averaging 2.5 percent more lately.
Read the terms, agreements and restrictions before applying. Keep an eye on fees, too. Plenty of rewards cards come without annual fees, so shop around for one.
Consumers should research credit card programs through a reputable company such as bankrate.com or creditcards.com and compare rewards, advises the nonprofit American Consumer Credit Counseling.
2. SIGN-UP BONUSES ARE WORTH WATCHING FOR.
Bonus points can increase your rewards quickly, although minimum spending requirements have made it difficult to bag them just for signing up for a card. Several top-tier card issuers issue large blocks of introductory points for their premier rewards cards, including Chase (70,000 points), American Express (60,000), Citi (40,000), Bank of America (35,000 points) and Discover (25,000 points).
Initial offers can still be lucrative. For about three months this year, new holders of co-branded British Airways cards got 50,000 points for their first purchase, another 25,000 points for spending $10,000 and a final 25,000 points for spending $20,000.
"When you see a really good deal, hop on it," says Kelly.
The best cards require top credit scores, usually 750 or above. Close to 40 percent of U.S. cardholders have attained that level. Check MyFico.com for a free estimate of your score.
3. PAYING WITH POINTS IS GETTING EASIER.
The days of having no option but to sit on points until you accumulate a desired amount are over. Thanks to technology advances that make it easier to convert points to cash, you can pay with points at an increasing number of retail sites. It's also possible to pay for part of a purchase with rewards points and the rest with a credit or debit card.
If you don't track your rewards closely, you may wish to seek out a rewards card that lets you pay your expenses after purchases, including the Capital One Venture card among others.
4. TRANSFERABLE POINTS CAN HELP SCORE REWARDS FASTER.
The main types of credit card rewards are fixed-value points, transferable points and airline co-branded cards.
Kelly, a former recruiter and self-described road warrior for Morgan Stanley, accumulated more than 500,000 air miles from credit cards last year by focusing almost exclusively on transferable points.
"Giving yourself flexibility and options is the key to getting the most value out of your points," he says.
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