Rewards credit cards are designed to “reward” consumers for their loyalty by giving something back to the cardholder; various rewards programs exist including points, cash back, frequent flyer miles or merchandise. Rewards credit cards are constantly improving because it is how the credit card companies compete with one another to gain new customers and to keep the ones they have.

While all rewards credit cards sound great at first glance, it's important to do a little in depth research on each before you select one. What you miss in the fine print might cause your rewards card to reward the credit card lender instead of your wallet!

Rewards cards don't reward if you carry a balance from month to month. When you use a rewards credit card, it's typical for the card to have a higher interest rate than a non-rewards credit card. If you are carrying a balance from month to month instead of paying it off at the end of each month, you're not likely to earn anything from the rewards after you pay out the interest.

What does “Up to” mean? You know you've seen it. Rewards credit cards that advertise cash back “up to” 1%. That means you might actually earn much less than 1% cash back, until you reach very high levels of spending on your card.

How much are cardholders paying for the rewards? Most credit card shoppers are comparing the points earned on various rewards cards, or the gift cards you receive. The best thing you can do is figure out how much those points or rewards are costing the cardholder. If you have to spend $10,000 in a year to get a $50 gift card- is it really worth it?

Frequent flyer miles are great rewards programs for people who charge a lot of purchases on their credit cards. If you don't, you'll be waiting years before you can qualify for your free flight. If you're an occasional spender with credit cards, you should probably look at credit cards that offer rewards at lower levels of spending in order to take advantage of rewards.

Understand what a gas station is. Gas rewards credit cards are extremely popular now that the price of gas is ever-increasing. They're quite generous, too, considering many will give up to 5% back on all gasoline purchases. But the only way to get the cash back on gas purchases on most of these cards is if you make your purchase at a “real gas station”. Supermarkets, wholesale clubs or other locations may not fit the card's guidelines and you won't earn as much cash back.

Annual fees will defeat the purpose of a rewards card. Usually. If you have to pay $30 a year for a rewards card, chances are you have to spend $3000 before you earn any rewards. However, if your rewards card offers double points or double frequent flyer miles, it might be worth the annual fee. It all depends how much you use your credit card.

Rewards have their limits. Make sure you understand what the maximum earnings for rewards are, particularly if you are someone who uses credit cards often. If your gas card gives you 5% cash back on gas purchases but it stops paying you when you've reached $300 in gas purchases, then look at all the rewards you've wasted because of their maximum limitations. Also keep in mind that some rewards expire if you don't use them within a specific period of time.