A new survey released by Citibank reveals that credit card rewards programs may not be worthwhile for many customers.

The report found 40 per cent of credit card users used their credit card despite having cash on hand, solely to earn reward points. Furthermore, 20 per cent of credit card users preferred not to redeem their points. The report also discovered cardholders are not utilising other discounts and privileges inherent with their credit cards.

Free travel insurance, extended warranties, and concierge services are just some of the benefits 50 per cent of cardholders tend to overlook. Customers are advised to read through the personal disclosure statement to find other benefits offered by their credit card. Although the process may be somewhat excruciating, finding hidden benefits can save cardholders hundreds of dollars annually.

The bottom line is, reward cards are only worthwhile when used correctly. As advised by Canstar Cannex, customers should pay the card off in full at the end of each month to prevent accruing interest, and should refrain from making unnecessary purchases simply to aggregate points.

Of 76 credit cards researched, two were found that offered an after-fee value greater than $100, provided the cardholder spent $14,000 with the card during the year. As users spend more, they can recoup more, with rewards of up to $1,000.

Credit cards attached to rewards programs tend to have interest rates above 20 per cent, hence cardholders are encouraged to repay the balance in full each month to reap the greatest rewards.

The Citibank survey also found that 66 per cent of cardholders have rewards credit cards. Of this figure, 17 per cent participated in multiple rewards programs by using multiple credit cards. 19 per cent of cardholders would rather build rewards points up than redeem them, and 11 per cent will flirt with the possibility of redeeming their points only to make a charitable donation.

Source: http://www.smh.com.au