Using cash back credit cards is rewarding in two specific ways. First, you’re earning money when you spend. That’s the obvious part. But when you know that you’re getting a rebate when you use your credit card, you also feel better about spending than you would otherwise. Feeling good can be dangerous, as you might make mistakes like spending more than you should while chasing that good feeling.

That’s why I’ve identified ten traps for using cash back credit cards. The issuers know that many people will fail to handle their credit cards properly, and the resulting profit from customers’ mistakes helps pay for those cash back rebates.

Credit card users are generally aware of these traps and can avoiding them, but sometimes other problem occur, beyond the spenders’ control. Consumerism Commentary reader SteveDH recent encountered a problem with his cash back credit card.

Here’s his story:

When I received my last VISA statement it showed that I had redeemed $275 in Cashback awards — I hadn’t. I got in touch with my bank and also started looking at all of the web pages and we found the someone had added a “Transfer Account” from GE Capital Retail Bank in Draper Utah to the redemption page and apparently requested the redeemtion. The information that they had to enter was the ABA number and account number. That’s how I know which bank it is even though only the last four digits of the account number were there. How they got to the redeemtion page without going through my login (which my bank says wasn’t compromised) is a mystery.

Although my bank killed the credit card and promised to apply the missing money to the new VISA card, I’m stilling waiting for final resolution. I download into Quicken almost everyday but I hadn’t even thought of checking rewards balances. In fact I’m amazed I noticed it on the statement this month. Yet another example of the crooks out there — some are pretty darn creative.

This is insanity. Cash back rewards should be something consumers should be able to forget about; they should be able to trust that each purchase earns the correct cash back amount (it occasionally doesn’t) and that the cash back will be there when you retrieve it. It’s a mystery how this redemption bank account was added to the cash back rewards page without SteveDH’s account being compromised. Perhaps it was an inside job.

I confess that I rarely look at my accrued rewards balances. As I primarily use airline miles rewards cards now, I generally see my rewards only when I visit Continental’s and United’s websites. The miles I earn from spending are deposited monthly, and I’ve not yet noticed any discrepancies. Cards that earn cash back, however, can be less organized.

Since cash back information is not downloaded into Quicken or reported in other software like Mint.com, it takes extra effort to verify your cash back is accruing correctly and is available according to the rules of your agreement. Don’t forget to check once in a while. You won’t be able to prevent every problem, but you’ll be able to report it to your issuer promptly, and hopefully have the problem resolved without difficulty.

Thanks for staring the story, SteveDH. If any other readers have stories to share, please contact me.

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