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These are the 3 worst ways to redeem credit card rewards

Credit card bonus offers can be worth upwards of $500, when used correctly — avoid making these mistakes so you can get the best value from your rewards. CNBC Select reviews the worst ways you can use your rewards credit card.

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Cash back, points and miles are a great way to save money with your rewards card, but if you don't think twice before redeeming them, you could be leaving cash on the table.

Your rewards are worth a certain amount of money. This value often hovers around 1 cent per point/mile, but it can be even higher if you take advantage of certain incentives, like booking through your card's online travel portal.

But you can also be worse off — and potentially devalue the amount of your points and miles — if you choose to redeem them in any of the following ways.

Below, CNBC Select reviews the worst ways you can use credit card rewards, so you avoid making these mistakes and instead get the most value from your rewards.

Worst ways to redeem credit card rewards

  1. Merchandise
  2. Statement credit on a travel card
  3. Pay with Points

1. Merchandise

You've probably noticed that your card issuer partners with many companies and brands to offer the convenience of applying your points towards everyday purchases inside the credit card rewards portal. But this convenience usually devalues your rewards.

While redeeming rewards for merchandise may feel like a nice way to treat yourself to a new appliance or laptop, it's generally a poor choice since the value you get from your points or miles is usually less than half a penny.

To see if you're getting a 1:1 value, take the cost of the item you want to buy and divide it by how many points are needed.

For example, a Dyson Cyclone V10 Absolute Cordless Vacuum costs 139,998 points through the Amex rewards portal. But you can currently buy it on Dyson for $499.99 (not including taxes and shipping). This makes the redemption value very low, with one point worth $0.0036 (which is less than four tenths of a cent).

The calculation is: $499.99 / 139,998 points = $0.0036 per point.

In this case, you'll want to reconsider before clicking "buy."

2. Statement credit on a travel card

Statement credit redemptions are great for cash-back cards, such as the Citi® Double Cash Card, but not so rewarding for most travel cards that earn points or miles. For the American Express® Gold Card, 1 point is worth $0.006 as a statement credit. That's 40% less than the Double Cash card.

On the other hand, if you have a travel rewards card that has a unique statement credit feature, such as Capital One's Purchase Eraser that allows miles to be applied as a statement credit for eligible travel expenses, you may receive a 1:1 value.

One way to check the value of statement credit redemptions is by checking whether your card issuer has a rewards calculator. Amex, for example, is known for providing a points value calculator for every rewards card it offers so you can simply select the card you have and enter the amount of points you want to redeem. Not all card issuers have this tool, but you can also calculate the value by dividing the total amount want to redeem as a statement credit by how many points or miles will be required to cover that cost.

For instance, say you want to offset a $50 purchase with a statement credit, but 8,333 points or miles are needed. You'll calculate the value of one point/mile to be $0.006, which is less than a 1:1 value.

The calculation is: $50 / 8,333 points or miles = $.006 each.

You should only redeem points or miles for statement credits when they are worth at least $0.01 each. So in this scenario, it would be best to redeem rewards for an alternative, such as airfare.

3. Pay with Points

Most card issuers provide "Pay with Points" or "Shop with Points" options at checkout for select merchants, such as Amazon, that can seem tempting — after all, you see your balance decrease instantly at checkout. But the value of one point is typically much less than a penny.

You should always strive to get a 1:1 value, which means 1 point is worth 1 penny. To find out if a Pay with Points purchase is valuable, take the cost of the purchase and divide it by how many points are needed.

So, if there's a $20 Amazon purchase and 2,857 points are required, one point will be worth $0.007.

The calculation is: $20 / 2,857 points = $0.007 per point.

You're better off paying for the purchase with your card, earning rewards from it, then using the rewards for something else where they will have a greater value, such as a gift card or travel booking.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.