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Racking Up Credit Rewards

If you like the idea of turning points into travel but don't care for the headache or time investment of seeking out the best value for your miles, award booking services might be worth the investment. For $100 to $150 a ticket, these services find the best award seats for you, using the least amount of miles, and can book your flight with the airline. They might be a good option if you are trying to travel during a peak season, at the last minute, or have a complicated route itinerary.

Pros: Possibly the biggest rewards potential, since the value of miles (or points converted to miles) can be more than 1 cent. Sometimes you can get in on a special deal like a hotel room for half the points or a flight that can save you 45,000 miles.

Cons: Often difficult to redeem and requires the most time investment on research to get the most value from your rewards You'll also need to accrue a lot of points or miles to cash in on free travel or obtain elite status.

Donate or Give Away Points or Miles

You can use some or all of your accumulated rewards to give to others—a charity, a friend, or family member. Most major credit card issuers have their own partnership with a charity or program that works with charities to make it easy for cardholders to donate their rewards or miles. Another way credit cards help charities is by designating a bonus category strictly for charity donations.

If you want to donate or give your rewards to a friend or family member, the person receiving the rewards typically has to be in the same rewards program, in another reward program that works with your reward program, or carry the same credit card as you.

Pros: It brings good karma , is highly convenient and a much better option than letting them go to waste.

Cons: In most cases, you can’t claim that charitable donation on your taxes.

Whatever you decide, make sure you use your rewards before they expire. Miles and points are an alternative form of currency, but they’re worth nothing if you don’t use them or they expire.

Now that you understand how credit card rewards are redeemed, you should also be aware of program opt-in considerations prior to determining the best credit card offer for you.

Merchandise

Redeeming rewards for merchandise like digital cameras and blenders rarely makes financial sense since you can often get those items cheaper through traditional retailers, and the value of your miles or points can go farther for other purchases like travel. Be sure to compare the cost of purchasing the merchandise outright against the cost of using your rewards to make sure you are maximizing the value.