The Rewards Programs With the Most Bang for Your Buck

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.

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.