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Best way to spend credit card rewards points

April 7, 2011 12:00:00 AM PDT
Millions of people who use credit cards earn reward points for every charge they make.

Besides airline tickets, they can get merchandise, hotels, even tickets to the rodeo.

So what's the best way to spend your points?

Dawn Danker-Rosen keeps track of the reward points she gets on her credit card so that she can book free flights.

With six people in her family, she says she has saved thousands of dollars.

"We've gone to California, we've gone to France, Spain and Italy, so we've gone all over the world using our miles," Danker-Rosen said.

But are plane tickets the best way to spend those miles and reward points? After all, there are computers, TVs, furniture and even mattresses up for grabs.

"Hands down, the best value for your miles is an airline ticket," said Consumer Reports Money Adviser Chris Fichera. "The way we calculated the value is to compare the miles you spend to the actual cost of the item."

For instance, the average price of a domestic flight is about $350. Take that figure and divide it by the 25,000 miles it can take to get a ticket, means each mile is worth about 1.4 cents.

Even if you have to use 35,000 miles, the value of the mile is still a penny.

"Buying merchandise with points or miles is generally a worse deal," Fichera said. "One flat-screen TV we looked at cost more than 78,000 points."

A TV like that retails for around $400. That figure, divided by 78,000, means the points are only worth about half a cent.

Using points for hotel stays may be worth it, but you've got to do the math because deals vary.

While air travel is the best way to spend your miles, airlines don't always make it easy with blackout dates and other restrictions.

Danker-Rosen said you have to be persistent and flexible. With a little effort, she's managed to book a trip for the whole family to China this summer.

Consumer Reports Money Adviser says if you have just a few miles you'd like to use up, some of the best deals for small transactions are newspaper or magazine subscriptions.