4 ways you're (probably) using your airline miles incorrectly

I've helped thousands of people to use their miles and I've booked a tremendous number of award tickets. Through my experience, I've learned there are four main ways people use their miles inefficiently. If you're spending your miles in any of the following ways, you're doing it wrong.

Don't redeem your miles for tickets where the points required vary based on the price of the trip. Loyalty programs — airline programs and credit cards alike — will often let you use your miles on any flight you want, and they'll charge you a number of points based on the price of the trip you've selected. This ticket, for example, might only cost 18,000 miles for a $180 ticket, which might seem like a great deal, but when airlines buy travel for you based on retail price, you're going to get a low value for your points —  just a penny or less. Often, saver awards can give you a much better deal. I try to make sure I don't cash my points in for less than 3 cents each domestically and even more internationally, but I won't trade a point for less than 2 pennies.

Avoid inexpensive domestic trips. Using the example above , a $180 ticket might only cost you 18,000 points, which is considerably less than a standard roundtrip ticket within the U.S., which typically costs 25,000 miles in coach. However, you're better off paying the $180 for this ticket and saving your miles for more expensive flights down the road. Use those 25,000 miles when tickets are $700, not $180.

Never trade miles for merchandise. When airlines have to actually go out and buy you something — an iPad, a toaster, a new TV — they're spending real cash. Miles are best used when you can leverage the buying power of your frequent-flier program (which buys literally millions of airline seats a year) along with its unique access to spoiling inventory (saver award seats that might otherwise go empty). You'll nearly always get much better value using points for a provider's own product than making them buy you someone else's product.

Upgrades aren't worth it. This will be the most controversial tip, because conventional wisdom used to be that the best use of miles was international upgrades. But upgrades have become much tougher to get, and with the introduction of cash co-pays (often $500 or more each way!) in addition to miles, they aren't nearly the value they once were. You may find you're effectively paying as much as you would if you purchased a discounted business class ticket outright.

The best use of miles is premium cabin international awards. Some families will stretch their miles with coach, but either way it's important to understand how much money a given number of points will actually save you, and make sure you're getting the most savings possible for your points. After all, points are a currency just like any other.