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When you see a commercial for one of those rewards credit cards on TV, do you ever notice how the actors who play in them have a look on their faces like they’ve just won the lotto – and life is now wonderful – all because they were smart enough to apply for a card? But what exactly is a “rewards” card, and how does it really work?

Well, this card is geared towards those people who use it like cash – instead of cash – to pay for almost everything under the sun. They use it for groceries, trips to the dentist and even book their nose jobs with it.

And boy, don’t the card companies reel you in with what you could be rewarded with! Potential customers are teased with visions of cash rebates, extra travel points, and huge discounts on goods and services they normally wouldn’t be able to afford. And, a person’s incentive to pay his balance down each month, is the promise of those huge piles of “thank you” gems that grow bigger with every purchase he makes.

So, if this sounds like you, be especially careful in reading the card holder’s agreement – before you get a card, and start using it like you don’t have to pay any of it back. A word to the wise is that many times, these cards carry higher annual fees than the others. If you don’t have the money to pay down a high balance each month, this could seriously affect your “point” accruals – not to mention your bank account.

Another thing that can sometimes happen is even when a person has followed the reward program requirements to perfection, and he finally has enough points to get something he’s had his eye on for weeks – when he tries to redeem them, he suddenly finds out that his points claim is no good. And it’s only after this happens, that he finally bothers to go over his agreement, and then sees a little detail he missed – that loop hole the company slipped in, giving them a way out of honoring their original promise to their members.

So, now that you’re well educated on the finer points of the “thank you” program, do you think that you’re someone who could handle a card like this responsibly? Or are you the type who is so prone to self-destruction, that just to see an ad for this kind of card would be all it would take for you to start your downhill run? Well, don’t stop reading now:

You’ll probably do OK if you’re a person who doesn’t make the decision to sneeze until you know all the facts. If this describes you – you’re probably very good with handling money, as well – and you most likely don’t stop with the phone calls to companies that have failed to deliver what they promised you, until they make good on that promise. And especially if you know – but don’t care – how long you’ll probably have to wait it out with your credit card company’s rewards program at some point, in order to get what you want, then you’re probably the world’s only safe candidate for this kind of card.

But, if you’re a person who waits until the last moment to pay a bill – and even then, it’s less than the creditor is expecting – you should probably forget you ever heard of this kind of offer in the first place, and move on.

So, when you’re shopping around for credit cards, be careful of the ones with the “rewards” programs. Know yourself well enough as to how responsible you are with money. You don’t want to end up with a huge accrual of “punishment points” as a company’s way of saying “thanks for being our customer”.

Visit Credit Card Guide to learn more about rewards credit cards.