Only 14% of Consumers Take Advantage of This Valuable Credit Card Perk

Credit cards have lots of great perks, but some of them are underused. Case in point, The Motley Fool Ascent recently asked consumers how they redeem rewards as part of a credit card study.

Half of them used rewards to pay down their card's balance. Another 36% redeem rewards within their card issuer's rewards portal. But only 14% of consumers said they transfer their rewards to travel partners. It was the least popular option, even though it's often how you can get the most value from your rewards.

The value of transferring your rewards

When you redeem credit card rewards toward your balance or through your card issuer's portal, they're worth a fixed amount. The most common value is $0.01 per point/mile. The exact amount depends on the card you have and the redemption method, but it's typically from $0.005 to $0.015 per point.

When you transfer points to a travel partner, they become points in that travel partner's loyalty program instead. If you transfer 50,000 points to United, they'll become 50,000 United miles. If you transfer that many points to Hyatt, they'll become 50,000 Hyatt points. (Transfers are most often at a 1:1 ratio, although it can vary).

You can get incredible value from your points this way, because the value depends on the travel you book. With expensive travel bookings, it's possible to get $0.03 per point or more. These include:

• Business-class and first-class airfare
• Luxury hotel stays

The reason is that some travel bookings are much more affordable in points than in cash. For example, business-class airfare often costs $3,000 or more. If you redeem your points at $0.01 a point for travel, you'd need 300,000 points to cover a business-class ticket.

That same business-class ticket may cost 60,000 miles if you book through the airline's frequent flyer program. If so, you could transfer 60,000 points from your credit card to the airline. You'll then have 60,000 miles in the airline's frequent flyer program, and you can use those miles to book your ticket. In doing so, you save 240,000 points.

How to transfer credit card rewards

If you like to travel, knowing how to transfer credit card rewards is one of the best ways to save. Note that this is only an option with certain types of points. Here are the credit card rewards programs that give you this option:

• American Express Membership Rewards
• Chase Ultimate Rewards
• Capital One Venture Rewards
• Citi ThankYou Rewards

For example, if you have a Chase travel card in its Ultimate Rewards program, you can transfer your points to any of its partners. But if your card earns points with Bank of America, you won't have this option. Bank of America doesn't currently offer transfer partners.

Start by opening a travel credit card with transferable points. American Express and Chase have the best rewards programs, in my opinion. Capital One also has a good program with plenty of transfer partners. You may want to check each program's transfer partners to see which one you like the most.

With most travel credit cards, it's easy to earn points. Many of them have big sign-up bonuses for new cardholders, often in the range of 50,000 to 100,000 points.

Once you're ready to book travel, log in to your card issuer's rewards program. Select the option to transfer points, then choose a travel partner. If you're not sure how to do this, contact your card issuer by phone or live chat. Here's how the transfer process works:

• Provide your account number in the travel partner's loyalty program. You can find this by logging into your account with the airline or hotel. If you don't have an account yet, you can create one free of charge.
• Enter the number of points you wish to transfer. Most card issuers only let you transfer points in increments of 1,000.
• Submit your transfer. After your transfer processes, the points will be in your account with the travel partner. The processing time depends on your credit card and the travel partner, but it often happens in just seconds.

Keep in mind that all transfers are final. You can't cancel them or transfer your points back to your credit card later. For that reason, you should transfer your rewards after you've chosen what you're going to book.

Transferring rewards is more complicated than other redemption options. That's almost certainly why most consumers prefer using rewards as cash back or through card issuer portals. But if you don't mind taking some time to get the hang of it, you can get amazing travel deals this way.