Wednesday’s post on the premature declaration of the demise of rewards cards brought some angry responses in my e-mail inbox. One example:

How can you even suggest that the existence of these cards is anything but a fraud committed against the American consumer? People are fooled into thinking that points have value, and your blog is perpetuating the myth that we can get a free lunch. Shame on you.

My, my, how the economic climate has changed. A post on points and miles even a year ago wouldn’t garner such vitriol. Today, it’s a “fraud.”

But my view remains. I rise again in defense of reward-earning credit cards, and their responsible use.

Let me be clear: I have no love for credit card companies and their abusive practices and devious schemes like two-cycle billing and universal default. I also have little pity for customers who spend more than they can afford and run up five-digit card debts, regardless of whether they grow irrational at the prospect of a “free” ticket or other reward, or simply want to keep up with the Joneses. (If people run up huge medical bills and are forced to use cards, they will find my pity, as well as my anger at our dumb health insurance system, but that’s another issue…)

The role of rewards in pushing people into debt is likely overstated: The tendency to overspend has been driven by the desire to pursue a certain lifestyle with the purchased objects and services, not earn a few points or cash back. Just look at the latest iteration of the Pew “luxury vs. necessity” survey, gauging which objects people claim they can’t live without. In a survey whose takeaway message is actually that people are ratcheting down their material expectations during this Great Recession, flat-screen TVs still came in as “necessary” for 8% of the population. I love my plasma tv, but a “necessity”? Seriously?

And yet, Americans as a group are coming to their collective senses, financially, and are starting to pay for things with money they have, rather than money they borrow. Debit card purchases exceeded credit card purchases for the first time last month, according to Visa.

That said, I still firmly believe in the responsible use of rewards-earning credit cards, with three conditions: 1) If you use such a card, you must be able to pay your bill off monthly; 2) you must be responsible in your spending, as well as your payments; and 3) you must not pay excessive annual fees, compared to the value you receive in rewards.

If you carry a balance, focus on your interest rate, not your rewards. And if you don’t charge much at all, avoid cards with annual fees, period.

If you can live within your means, then by all means, plow your spending into your cards and use the cards as an interest-free loan every month.

Several readers asked what I’m carrying in my wallet. So here’s full disclosure. I personally have four cards, only one of which has a fee. They are:

• American Express Starwood card
  $45 annual fee, fees waived the first year
  I use this card for domestic travel, restaurants, Costco purchases, and most automatic payments (like insurance, utilities, etc.) The card yields one Starwood point per dollar, plus periodic bonuses. (It currently has a 10,000 point bonus for new signups, with another 15,000 point bonus if you charge $15,000 to the card within 6 months.) Points are swept monthly to your Starwood account, where points can be spent on hotel rooms (generally at places I like to stay), can be converted to frequent flyer miles at favorable rates, or can be spent on plane tickets (though I’m no fan of the latter option). I very much like the option of converting 20,000 Starwood points to 25,000 miles on a range of airlines. I aim for 2 cents per point or mile in redemption value when I cash in my points (and I often get far more than that),which puts the value of the rewards in the 2 to 2.5% range.
• Chase Freedom Plus Visa
  no annual fee
  This exact card is no longer offered to new accounts, but something very similar is. I used to carry a United Airlines Mileage Plus Visa, but the annual fee was just too high, and I was locked into United miles. So I converted to this, which has no annual fee, comes with Visa Signature benefits, and offers a wide range of reward options. I use this card nearly exclusively for groceries, gasoline, and drugstores, for 3 points per dollar. Points can be converted to cash, 1 point for 1 cent, or can be converted to United Airlines miles (5000 miles = 6000 points) or other rewards at generally favorable rates. I get an effective rebate of 2.5% here.
• Citibank Dividend MasterCard
  no annual fee
  This is the black sheep in the wallet. (I looked: It’s actually not even in my wallet right now, and I may have card’s precise name wrong. It’s no longer offered at the Citibank website.) It has a cashback feature, but I rarely ever use the card unless there’s some benefit that comes with paying with MasterCard (Hyatt had a worthwhile MasterCard promo at one point, which I recall). There was also a time when Citibank was giving zero-interest rate cash advances with no transfer or finance fees. None. Insane. With no other balance on the card, it was a six-month interest-free loan, and it even paid a cash rebate. Citibank paid me to borrow their money, so my rate of return was infinite. (No wonder one share of their stock costs about as much as a Big Mac.) A more realistic rebate rate is closer to 1%.
• Visa card issued by my credit union
  no annual fee
  This is my go-to card for international travel — no currency conversion fees, no annual fees, and simply no BS make this a great choice. The downside: I’m not earning rebates or points, but I’m saving big bucks on currency conversion fees. And if I ever need to carry a balance, this would be the card, with a fixed 8.6% rate.

I’m comfortable with this mix, for now, with two cards in regular use, both yielding over 2% on purchases, one card for international use, and one warming the bench. Could I be doing better, and milking even more out of my cards? Perhaps.

Could I be doing better? Perhaps. I’m always open to suggestions.

So, wise and worldly readers, what’s in your wallet?