Credit card rewards programs have traditionally featured airline miles, gift certificates, and cash back for customers who spend enough on their cards. But recently, credit card companies have started offering a different kind of gift: they are handling out lower interest rates, refunding interest payment, and using other strategies to provide incentives for cardholders to pay down their debt and make on-time payments. The deals, however, don’t always work in consumers’ favor. The new Citi Forward Card gives cardholders points and reduces their annual interest rate for making on-time payments and for staying under their credit limit. TD Bank’s Simply Flexible Card charges interest rates depending on how much of balance customers pay off. If they pay off 10% or more of their balance, then they get the lowest available interest rate. Card companies say the idea behind the new rewards is to help customers get on top of their finance. “It’s all about promoting financial fitness and giving customers the choices they need to help them manage their debt,” says Michael Copley, senior vice president of TD Bank. He says the Simple Flexible Card motivates cardholders to pay off more of their debt and attributes the company’s relatively low delinquency rate to the product. Because of the continuing recession, companies have an incentive to keep their customers from sliding further under water. “This is in response to recognition that they have to help their cardholders do a better job of managing their money so customers keep those cards for a long time,” says Ron Shevlin, senior analyst at a research and advisory firm. The challenge for companies, he says, is to balance the profitability of consumers who maintain a balance against the increased risk that those cardholders pose because they are more likely to default on their debt. Rewards programs that encourage customers to maintain a balance while paying on time, such as the Motiva card, may help them strike that balance. According to consumer advocates and credit card experts, consumers who always carry a balance may be better off selecting a card with the lowest interest rate rather than participating in one of these rewards programs. “In general, I think these cards are great for people who don’t have great credit and regularly carry a balance on their cards” says Adam Jusko, founder of www.indexcreditcards.com. “Customers who only occasionally carry a balance, on the other hand, would be better off finding a card with a more appealing rewards program” he adds.