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  • By Saabira Chaudhuri
  • The Wall Street Journal

Safeguarding Rewards Points

Americans are earning more travel-rewards points than ever—but they also are leaving more of them on the table.

In a bid to continue to attract and retain big spenders, airlines and hotels are launching new, more-generous rewards programs. AMR Corp.’s American Airlines has teamed up with Starwood Hotels & Resorts Worldwide Inc.’s Sheraton and Westin chains to offer 1,000 bonus frequent-flier miles per stay through August. In July, United Continental Holdings Corp.’s United Airlines began offering a new credit card that allows customers to earn between 25,000 and 40,000 bonus frequent-flier miles. Hilton Hotels Corp. currently is offering members of its HHonors rewards program the option either to double rewards points or double airline miles for hotel stays between July 1 and Sept. 30.

In 2010, the most recent data available, U.S. consumers had a total of more than two billion loyalty memberships—about 18 memberships per household—up 16% from five years ago, according to Cincinnati-based loyalty-marketing company Colloquy. Some 46% of consumers actively use rewards programs,up from 39% in 2006, and about one-third of those are travel and hospitality programs.

Yet while Americans accumulate $48 billion in rewards points and miles annually, according to Colloquy, they leave one-third of these unredeemed and at risk of expiring.

Companies count on members failing to use “a certain amount” of their rewards points, says Bryan Pearson,president of Toronto-based LoyaltyOne, a firm that advises businesses on their loyalty strategies. “It’s part of the economic model they work on,” he says.

In July, Svetlana Milshteyn, a 35-year-old mental-health clinician, discovered she had lost about 8,000 frequent-flier miles she had collected with Lufthansa. “I knew there was an expiration date, but I kind of lost track of it,” says the Chicago resident. “This year, I suddenly noticed they were gone.”

While some companies will alert members before their points expire, you shouldn’t count on it. Mr. Pearson recommends carefully reading the fine print so you know when your points expire, and whether a certain period of inactivity could make your account dormant.

Terms of the programs vary widely. While miles earned in Delta Air Lines Inc.’s SkyMiles program, for example, don’t expire, members of American Airlines’ AAdvantage members must earn or redeem miles once every 18 months to prevent them from expiring. American currently is offering members the ability to reactivate expired miles for a fee of between $200 to $600 until the end of the year.

Often the easiest way to keep memberships active is to use a credit card associated with the account by linking it to a recurring payment or regularly using it to shop online. “All of the major frequent-flier programs have online shopping malls,” says Randy Petersen, founder of flying forum FlyerTalk. “For 99 cents, you can keep your account active by going and buying a song from Apple.”

You also can keep your account active by donating points to charity. For instance, in Hilton’s HHonors program, points expire if there is no activity for a 12-month period, but you can keep them alive by donating points in $25 increments to such charities as Habitat for Humanity and the American Red Cross.

Knowing which loyalty program works best for you isn’t always clear-cut. Airlines in particular tend to structure their rewards programs in a complex fashion. Mr. Petersen suggests identifying the most important features you are looking for and trawling online travel forums like FlyerTalk and MilePoint to compare programs.

People looking for upgrades should avoid Southwest Airlines Co. and Republic Airways Holdings Inc.’s Frontier Airlines, for instance, as these don’t have first-class seats; those looking to travel to say, Hawaii, shouldn’t choose JetBlue. “Do your research first and find something that fits,” Mr. Petersen says.

Here are some other pointers for getting the most from travel-rewards programs:

  • Earn elite status. Accumulating enough points on an airline can qualify you for elite status, which allows you to earn double the miles for flying the same distance, while also offering other perks like upgrades, shorter lines and no fees for extra luggage.
  • Don’t waste your points on cheap tickets. “The rule of thumb on what a mile is worth is to measure it against the airfare you would be paying,” says Mr. Petersen. For instance, using 25,000 miles to buy a ticket costing $200 works out to about 0.8 cent a mile, while using the same miles to buy one costing $800 is about 3.2 cents a mile.
  • Transfer your miles. Check if your rewards program allows a transfer of points upon death or divorce. Bank of America Corp.’s credit-card rewards program, WorldPoints doesn’t allow customers to transfer points to someone else, or include these in a will upon death. But American Airlines may allow the transfer of accrued mileage from a deceased person for a $50 fee, or from one divorced spouse to another for a $100 fee.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

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