Which credit card makes the smartest sense?

HOUSTON Susan Hodara buys groceries and just about everything else with her credit card. That's because American Express gives her cash back on all her purchases.

"That's a real incentive for me to use this card and not another card," she said.

Susan gets five percent cash back on purchases of groceries, gas, and drugstore items. And it really paid off last year.

"I open my bill and I see this credit for $681," Hodara recalled. "It really made a dent in that bill. So I was very impressed."

Consumer Reports money adviser Mandy Walker says reward cards can be good, but not for people who carry a balance.

"If you don't pay off your bill in full each month, your interest payments and late fees can wipe out your rewards," Walker explained.

Consumer Reports looked at dozens of cash-back cards and says it is crucial to read the fine print.

"Some cards limit how much cash back you can earn," Walker cautioned. "Some cards limit where you can shop to get the most back. And, in some cases, you'll have to contact the company to get your rewards."

The best cards set no limit on the cash back you can earn. Also, look for a card with rewards that don't expire, and cards with no annual fee. Consumer Reports has found several cards to recommend, including Blue Cash from American Express. But to get the top amount -- five percent back -- she has to charge at least $6,500 a year. A good alternative that has no minimum spending requirement is the Capitol One No Hassle rewards card. It gives two percent cash back on gas and groceries.

Consumer Reports says to get the biggest benefit from your cash-back card, use it for most of your shopping. But be careful -- people tend to spend more with the cash-back incentive. So it's important to stay within your budget.

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