The Top 5 Credit Card Blunders

1. Buying Into the "Free Lunch"
"Don't be fooled by a credit card company offering three points for every $1 spent," says cardratings.com founder Curtis Arnold. Ask to look at the rewards catalog before signing up — you could find that a $10 Target gift card costs 5,500 points (which means you’re really only getting .54 percent cash back, not the three percent you're counting on).

2. Skipping the Fine Print
The good news always appears in the marketing spiel, "but the real story is what you read when you look at the terms and conditions of your agreement," says Ben Woolsey, director of marketing for creditcards.com. Pay particular attention to the way the bank calculates rewards (and whether there are annual caps on them), balance transfer fees and their caps, and how long the APR or rewards system will remain in effect. Some card companies, for example, may say you’ll "earn up to one percent," but in reality, that only applies to a monthly debt of more than $1,500 — anything below that amount may well earn you just .25 percent.

3. Jumping the "Points" Gun
You get more bang for your "rewards" buck if you accumulate your points and then — through your credit card company — get a gift card for use at the store that sells the item you want, rather than cashing in points for the same item through the rewards catalog,” says Allan Keiter, president of myrateplan.com.

4. Refusing to Question "Authority"
While that billboard at the bus station may be emblazoned with a hard-to-beat interest rate, look at the standard disclosure on the actual card application. In most cases, there will be a base rate (called "prime"), plus another number that varies depending on your credit. (The higher the number, the higher your "real" interest rate.) If you don’t have great credit, you’ll still get the card, but you could also wind up paying "prime plus eight" — much higher than the rate advertised.

5. Too Much Hesitation
"Be aware of how often you’re redeeming your points," says Woolsey. If you’re waiting for the big prize, make sure there’s no expiration date looming, or all of your accumulated points could go poof. And if you have cashed out points for a gift certificate, check the date on the certificate, and jot the expiration down on your calendar. "Usually, there's a one-year expiration, but it can vary," he adds.