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Canadians are clearly believers when it comes to racking up loyalty rewards points.

Nearly three-quarters of us – 72% to be exact – carry at least one credit card that offers a rewards program, according to recent TD Canada Trust research. For more than eight out of 10 cardholders, loyalty perks are a big priority when selecting a card.

However, figuring out exactly how to use those miles or points so you're not simply wasting them can be a bit confusing. For instance, you can convert points into cash, buy gift cards, book a holiday, transfer them into other loyalty programs or simply buy the bike you’ve had your eye on for a long time.

But what’s a point really worth? With cash back credit cards, the reward you earn is clear: it’s always a percentage of every dollar spent. With other types of rewards though, it’s all about the dollar value of the rewards earned.

Make Sure You’re Getting a Decent Deal

For most programs, a reward mile is going to be worth between one and two cents but that value can vary widely depending on how you choose to redeem it. If you’re getting much less than that, you’re missing out on a big chunk of value.

To see where you stand, divide the cash price of whatever you’re buying by the reward’s cost. For example, if you bought an Air Canada ticket that would have cost $369 with 25,000 miles, you would divide $369 by 25,000 – which works out to about 1.5 cents per mile.

If you’re unhappy with what you're getting, it may be worth it to take a look at other cards. For an annual fee, cards such as the Scotiabank Passport Visa, the TD First Class Travel Visa Infinite card or the Scotiabank Gold American Express card will give you reward returns between 4% and 5% of every dollar you spend – a high ratio in comparison to other cards. For no annual fee, the Capital One Aspire Travel Platinum MasterCard and many various MBNA MasterCards will give you travel rewards as well but for only 1% of every dollar spent.

According to the TD survey, travel rewards such as flights, car rentals and bus or train tickets are the most common redemptions – redeemed more than 40 of the time. But non-travel items like cash credits and grocery purchases are also very popular, and are redeemed anywhere from 30% to 35% of the time.

Get Someone Else to Do the Work

Whatever you do, don't use your points to buy gift cards or merchandise, suggests Avery Campbell, the founder of Awarding Canada. He says you get the best bang for your buck by using points to book international business or first-class travel.

Many people assume that if their airline tells them there are no award seats available, then that’s the way things are. But an award booking service can often find the seats that don’t appear to exist, Campbell maintains. For a fee of $125, his travel concierge service will piece together an itinerary in business or first class, helping you avoid expensive taxes and fees on your reward bookings.

He, and other similar services such as Easy Award Booking, can also help you stretch your miles further by taking maximum advantage of flexible routing rules such as layovers and open-jaws.

Maybe Someone Else Can Use your Points Instead?

Know someone who’s heading to school in September? How about swapping some unused credits for HigherEdPoints which can then be applied towards tuition, residence, meal plan fees or even to pay back student loans at participating institutions? While the valuation ratio is probably not the greatest, the program is likely to appeal to parents or grandparents looking to giving family members a helping hand.

Another option is donating your points. With the economy leaving many feeling financially squeezed, it’s often tough to find the cash to support your favourite charity. This is an easy and economical way to help others. Donating your Air Miles allows non-profit organizations like Amnesty International or Special Olympics Canada to access airline seats to fly people in need, or book them into a hotel room.

Or perhaps you’d like your points to help out a cause closer to home. The Ottawa Humane Society, for example, uses the points it receives from sponsors to purchase prizes that are then raffled or sold to raise cash.

Want to find a travel rewards card that can fly you to your dream destination and help a charity close to your heart?

Gordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a consulting firm focusing on retirement readiness. Gordon was a columnist for the Globe & Mail and Morningstar for many years and is also currently a columnist for Investment Executive, Canada’s national newspaper for financial advisors.

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