For years, all that credit card companies had to do to get business was ... well, they just had to offer credit cards. But now, with so much competition in the lending marketplace, the various banks and creditors have to lure in new debtors with gimmicks and prizes. One of the most popular ones now are the "rewards" cards, that give users cash back on purchases, or let them rack up points that can be used for plane tickets and other things. But is a rewards card right for every situation? We shall see.

If your card is a "rewards" card, all that means is that when you use it for your normal purchases, you earn points. Sometimes it's a straight one point for every one dollar; sometimes it's a different system. Once you've earned enough points, you can trade them for all sorts of prizes, or sometimes just cash.

According to one study, about half of all new credit card offers have a reward component involved, and four out of five rewards cards have no annual fee. That's good, right? Yes, it is. But rewards cards also tend to have higher interest rates than their non-reward counterparts. The average percentage rate for a rewards card is 14%, while the average for non-rewards cards is about 10%.

So you need to be careful when you apply for this kind of card. The rewards sound great, but how much are you really paying for them? If you normally carry a balance from month to month — and therefore pay interest charges — you'll end up paying quite a bit for that "free" prize at the end of the year. Interest charges pile up fast, especially when you remember that these cards usually have higher rates.

In other words, you need to make sure beforehand that the rewards card is actually going to be useful to you, not just theoretically but realistically. If you pay off your balance every month, thus incurring no interest charges, then yes, those rewards points are wonderful. But DO you pay off your balance each month? Or do you just WANT to?

One kind of rewards card is the airline-related credit card. Every dollar you spend with the card gets you an "airmile" good toward a plane ticket, and you get extra miles if you use the card on specific things like plane tickets and other travel-related costs. Sounds good — but the annual fees are usually more than $100 a year, and the interest rate is up around 16%.

If you travel extremely often and spend a lot of money in general, and if you pay off your balance on the card each month (before those interest charges kick in), the card can be a bargain for you. But otherwise, you're just wasting money with annual fees and high interest rates. You have to rack up 25,000 points before you get a free plane ticket, which means spending $25,000. And by the time you do that (five or six years down the road, probably), how much will you have spent on interest charges and annual fees?

Something else to look out for as you compare credit card offers is a rewards card with a surprisingly high cash back value, like 5 percent. Five percent return on everything you buy sounds terrific, but look closer: Those credit cards usually have much, much higher APRs, too. Again, if you're paying off your balance every month, fine. Otherwise, do the math to determine whether you're actually getting any rewards from your rewards card.

We've mentioned two types of cards, those that give cash back and those that offer points. Which kind is better? Generally speaking, the points are more valuable. On a straight cash-back card, you get 1 percent of every dollar you spend. Spend $25,000, get $250. Meanwhile, with a points reward card, your $25,000 spent means 25,000 points, which can be redeemed for a free plane ticket valued at $500 or more.

These credit card offers are among the ones that give the most points in exchange for the smallest fees: American Express Blue, Chase Perfect Card, Chase Travel Rewards Card, Bank One Disney's Visa, and Bank One Flexible Rewards Select Visa.

Finally, we offer these tips from financial experts on how to make the most of your rewards credit cards:

1. Cards with several rewards options -- instead of a straight "we'll give you 1 percent cash back" — are more useful because they allow you to trade your points for a greater variety of things.

2. Credit card companies can change their plans any time they feel like it. So it's smart to use your points as soon as you can, before they have a chance to switch the rules around.

3. Remember those higher interest rates on the rewards cards, and only get one if you can pay off the balance every month.

4. If you're getting a rewards card, only get one. If you have two, you'll split your spending, and it will take longer to accumulate enough points on either card to get anything.

Copyright © 2012 www.acclaimsecuredcards.com. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.