Updated on December 31, 2007.

JUST HOW REWARDING is your credit card's rewards program?

It's a question more consumers ought to be asking. Sure, the expected value of one point is a penny, or, for one airline mile, twice that, says Curtis Arnold, founder of CardRatings.com. But do the math and you'll find that the real value is almost always much less. Just how much less depends largely on the program you're participating in, and which rewards you're aiming for. "You have to be very, very familiar with the value of the rewards," he says.

To determine the best deals, we crunched the numbers at four credit-card programs: Citibank's Thank You Network, Bank of America's WorldPoints; Visa Extras and American Express Membership Rewards. We looked at the point requirements for five common rewards, assessing their value in relation to the item's market value (See chart below).

Our results? There's no clear-cut "best" way to use your points each option has its own pitfalls but some are obviously better than others.

The Good

Looking strictly at per-point value, charitable donations are the most reliably valuable reward. Charitably-minded consumers can make a $50 donation to the nonprofit of their choice for as little as 5,000 points ($50 worth). But there's a catch. Technically, it's the credit-card issuer making the donation, so you can't take a tax deduction for points or miles donated. If you want the deduction, take the reward in cash and write a check yourself.

Shopping for yourself? Gift cards are often a program's best deal, says Arnold, provided you can snag a card for a retailer with which you regularly shop. (Otherwise, you can bet you'll spend more than you save.) Partnerships with retailers enable credit-card issuers to offer gift cards for fewer points than their cash equivalent. "Most of the time, you can come out ahead," he says. A $100 check from American Express is 20,000 points; a $100 gift certificate for Banana Republic just half that.

Cash is also a good option, says Scott Bilker, founder of DebtSmart.com. "It's simple," he says. "You know exactly the value of what you're getting." Although you'll need more points to snag the reward, you can use it anywhere without overspending.

Rating Rewards*
	American Express Membership Rewards	Bank of America WorldPoints	Citibank Thank You Network	Visa Extras
Gift card, $25	2,500; $0.01/point	3,250; $0.008/point	3,500; $0.007/point	11,500; $0.002/point
Charitable donation, $50	6,000; $0.008/point	6,000; $0.008/point	5,000; $0.01/point	Not a reward option.
Cash, $100	20,000; $0.005/point	12,500** $0.008/point	17,000; $0.006/point	50,000; $0.002/point
80GB Apple iPod, $249	42,000; $0.006/point	39,200; $0.006/point	34,600; $0.007/point	177,500; $0.001/point
Round-trip domestic airfare, $343***	25,000 (traded 1:1 for airline miles); $0.01/point	25,000 (flat rate); $0.01/point	34,400 (flight-specific); $0.01/point	100,000 (flat rate); $0.003/point

* Assuming one point/mile earned per $1 spent. Bonus point offers not considered. ** Bank of America offers $80 and $120 checks for 10,000 points and 15,000 points respectively, but no $100 check. Point requirement calculated by per-point value. *** Lowest price from Expedia.com for a nonstop flight, New York to Los Angeles, March 23-26. Price is available on American, Continental, Delta and United.

The Bad

As a category, airline tickets have potentially the best per-point value, especially if you're hoping to fly a popular route or during a busy travel time. Too bad they're next to impossible to redeem. "Because the airlines are so full [with paying customers], they don't want to give away those reward seats," says Tom Parsons, chief executive of

BestFares.comhere

The Ugly

Trading for "stuff," from iPods to luggage to nonstick pans, is hands-down the most ineffective way to use your points. "A lot of the merchandise is crap, and the stuff that's not is way overpriced," says Arnold. Case in point: You could trade 39,200 Bank of America WorldPoints for a 80GB iPod, which retails for $249. Or you could use just 35,000 points to get a $350 check enough to buy the iPod at your local electronics store. You'd come out roughly $100 ahead, and saved 4,200 points to use for another reward.

Maximizing Point Value

PICKING THE RIGHT rewards is one way to get the most per point spent, but picking the right program is just as important. "Ask yourself, 'Is that reward worth it, or do I need a different card?'" says Bilker. The math is simple. The fewer points required for a given reward, the less you have to spend to earn it, and the more value your points have. In our number crunching, Citibank's Thank You Network came out ahead, with the highest per-point values in three of the five categories, and fair values in the other two. If you tend to go for a certain kind of reward, says Bilker, check out how your credit-card program stacks up against the competition. Applying for a new card? Before you sign up, ask the issuer to send you a copy of its latest rewards catalog. Here are five other strategies to try: Pay off your balance The more you spend on interest, the less your points or miles and eventual rewards are worth. Be loyal The more credit cards you're using, the fewer points you'll accumulate on each. The exception: Citibank and American Express, which combine points from several credit cards into one account. Avoid annual fees In rare cases, credit cards that carry an annual fee can boost the value of your rewards. But for most consumers, it's just an added cost that eats away at their value, says Arnold. Save up Resist the urge to spend your points as soon as you rack them up. Issuers tier their programs the more points you have, the sweeter the reward. Say you spend 10,000 points on an $80 check from Bank of America and then, a few months later, another 15,000 points on a $120 check. Had you saved those points to redeem all at once, you'd have walked away with an extra $50. Seek out point promotions If you're earning just one point or mile per $1 spent, you're really missing out. "You can easily rack up double, triple points," says Arnold. Look to your credit-card statement and your issuer's web site for bonus points offers.