We combed through hundreds of offers to find the most generous programs. By Laura Cohn, Associate Editor and Joan Goldwasser, Senior Reporter August 4, 2010 Credit-card issuers are ramping up efforts to entice you to choose -- and swipe -- their cards. Direct-mail offers doubled in the second quarter of this year compared with the same period a year earlier, to about 988 million, according to Mintel, a market-research firm. More than 80% of the offers were for rewards programs, and many of the perks are juicy -- double miles, 5% cash back, even contributions to your IRA. But not all rewards cards are worthy of a place in your wallet. To get the benefits, you may be required to charge a certain amount. Plus, the number of points you can rack up may be capped, and the window to use your points may be narrow. An increasing number of rewards cards charge an annual fee -- although it's often waived for the first year.Used strategically, rewards cards can pay off handsomely. Scott Bilker, founder of the credit-card advice Web site DebtSmart.com, says he received an offer for a 10% cash-back card from Citibank a few years ago. At the time, Bilker was remodeling his kitchen. Once he confirmed the offer, he signed up, charged his new kitchen cabinets and saved $1,000. But if you tend to carry over a balance on your credit cards, you probably shouldn't sign up for a rewards program in the first place: Rewards cards usually charge a hefty interest rate. Whatever you earn in perks would likely be eaten up by interest payments. Of course, different lifestyles and shopping habits call for different cards. If you're a frequent traveler, you can earn air miles and perks from a travel rewards card that more than offset an annual fee. If you don't travel enough to use miles, a cash-back card may be a better choice. And if you have a long drive to work, a gas card could be a winner. Among the hundreds of choices, Kiplinger's found standouts in four rewards categories: travel, cash back, retail/gas and so-called hybrid cards, which let you customize your card's features or benefits by picking and choosing categories. Banks are beefing up rewards programs for debit cards as well, although they usually aren't as generous as the credit-card programs. Advertisement Travel For travel rewards cards, the possibilities are virtually endless. If you want to be able to transfer miles to more than a dozen frequent-flier programs and are willing to pay off your balance each month, the American Express Premier Rewards Gold charge card (www.americanexpress.com) fits the bill. Each dollar you spend on airline tickets earns you three points, and a dollar spent on gas or groceries gets you two points. For other purchases, you earn one point per dollar. (One point translates to one mile in airline frequent-flier programs.) With this card, you don't have to worry about a limit on your points, nor will they expire. You'll pay a $175 annual fee, but it's waived the first year. Because it's a charge card, not a credit card, you may not roll over a balance to the next month. We also like the Penfed Premium Travel Rewards American Express credit card (www.penfed.org). The card, which earns you five points per dollar spent on airline tickets, three points on hotels and dining, and one point on other purchases, has an annual fee of just $50 (waived the first year). To qualify for the card, you must be a member of the PenFed credit union, which costs $20, but you can use your points on any airline. Caveat: You'll need to use your rewards quickly because they expire after five years. You can carry a balance, at a variable interest rate of 13.24% (all interest rates cited were in effect as of early July). Among rewards cards without annual fees, the Simmons First Visa Platinum Travel Rewards card (www.simmonsfirst.com), with a 9.25% variable rate, gives you one point for every dollar you spend. It takes 22,000 points to qualify for an airline ticket (worth up to $325 to go anywhere within the 48 contiguous states). You can also use your points for hotel stays, restaurants and car rentals. But be sure to cash in your points within three years or they will expire. When you use the Capital One Venture Rewards card (www.capitalone.com), you not only earn two miles per dollar spent, but you pay no foreign-currency conversion fee if you use the card abroad. You get 10,000 bonus miles if you spend $1,000 in the first three months you use the card. The interest rate is a reasonable 13.9% variable rate, and the $59 fee is waived for the first year. You can redeem your miles for flights on any airline, hotel stays and merchandise, to make charitable donations, or to get a credit on your statement. Advertisement Cash back You may prefer to get cold, hard cash in exchange for your spending. If you fall into that category and use your credit card frequently, the American Express Blue Cash card (www.americanexpress.com) is a good choice. When you first sign up, you get 1% cash back when you buy gas, groceries and drugstore items. Other purchases earn you 0.5%. Once you spend more than $6,500, you earn 5% on gas, groceries and drugstore purchases and 1.25% on other items. The card has no annual fee and no limit on the rewards you can accrue. But like most rewards cards, this one works best if you pay off your balance monthly. Otherwise, your cash rewards will be eaten up by the 17.24% variable interest rate you'll pay after a six-month 0% offer expires. Want to squirrel away cash for retirement? The Fidelity Retirement Rewards American Express card (www.fidelity.com) helps you put your retirement savings on autopilot. With this card, your charges can earn you 2% cash, which is deposited into a Fidelity-managed IRA. The card, which has no cash-reward limits and no annual fee, can also be used to accrue points for travel and gift certificates. It has a variable rate of 13.99%. Another top pick is the Capital One No Hassle Cash Rewards card (www.capitalone.com), which earns 2% cash back on gasoline and groceries and 1% on other items. The card has a $39 annual fee but no limit on the cash you can earn, and it carries a rate of 0% until March 2011. After that, the rate goes up to a variable 19.8%. Gas and retail If you drive long distances, a gas rewards card can help fill your tank. The no-fee ExxonMobil MasterCard (www.citibank.com), for instance, earns you 15 cents per gallon when you gas up at an Exxon or a Mobil station. The card also has a tiered rebate of up to 2% on all other purchases until you spend $10,000 for the year. After that, you get 1% back. Rewards are credited on your monthly statement in $10 increments and expire after two years. The interest rate for the regular card is a variable 23.99%. For the platinum card, it's a variable 19.99%. Advertisement If you'd like to earn a rebate on all brands of gas, consider the no-fee Discover Open Road card (www.discovercard.com) or the Penfed Visa Platinum Rewards card (www.penfed.org). The Discover card offers a 2% rebate on gas up to the first $250 spent per month, and up to 1% on everything else (the variable interest rate runs from 11.99% to 19.99%, depending on your credit history). The PenFed card, which has a variable interest rate of 13.99%, offers 5% cash back on gas, 2% on groceries and 1% on other purchases. With Citibank's no-fee Diamond Preferred Rewards card (www.citicards.com), you earn five points for every dollar spent on gas and groceries and at drugstores for 12 months, and one point per dollar after that. If you spend $300 within the first three months, you get 6,000 bonus points that can be redeemed for a $50 gift card. Points earned on the card can be used for travel, event tickets and merchandise. The card comes with a 0% balance-transfer offer for up to 15 months, and a variable interest rate ranging from 12.99% to 20.99%, depending on your credit history. Points expire after five years. Costco members have access to the no-fee TrueEarnings Card from Costco and American Express (www.americanexpress.com). With this one, you earn 3% on the first $3,000 in annual gasoline purchases (1% thereafter), 3% on spending at restaurants, 2% for travel purchases and 1% for other items. It has a 0% introductory rate for six months. After that, it goes up to a variable rate of 15.24%. Customized Some credit-card issuers let you pick and choose the rewards you want. For example, with Discover's new CardBuilder tool, you start by describing your credit status and stating whether you plan to carry a balance. Then you select the type of reward you want. Among your choices: double miles on travel and restaurant purchases, or 5% cash back on items that rotate each quarter (such as travel during the first three months of the year, followed in the second quarter by spending on home and fashion, and so on). Finally, you choose what's crucial to you: a low introductory rate, a low purchase rate or a low balance-transfer rate. Advertisement Along the same lines, the new ZYNC charge card from American Express enables you to select among ten "packs" of benefits. Some are free; others cost up to $25. Free packs include rewards for volunteer service, a travel pack with a specialist to help you book your vacations, an "Eco" pack that awards extra points at so-called green merchants, and a personal-finance pack that offers a free credit score. Fee-based packs include double points you can use for airline and concert tickets; cell-phone, cable and Internet bills; and restaurant and department-store bills. Aimed at young adults, the card costs $25 a year and requires you to pay off your entire balance each month.