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In a previous�newsletter we highlighted 5 Things NOT TO DO with your Credit Card Miles &�Points and included the aspect of not holding on to your credit card miles for too long.�Before we explain why you shouldn�t do this, it�s important to understand the relationship�between airline miles and credit card points. Equally important is understanding the rewards�industry is becoming increasingly more competitive, bringing with it new opportunities to�make money and travel the world (whatever your preference for earning miles and points)�but also bringing with it new challenges as well.

We will first explain the relationship between the credit card points like American Express,�and Airline Miles like American Airlines Advantage Miles, and the association between the�two.

The airlines offer frequent flyers the opportunity to earn miles based on the number of miles�flown or the price of the airline ticket. They also sell these miles to partners like credit card�companies, e-commerce sites, florists and rental car companies among others. Credit card�companies in turn, buy these miles from the airlines so that they can incentivize the public�to use their specific credit card. And as we know, credit card companies make money by�charging vendors a percentage of every sale. Why this is relevant is understanding that the�airlines who sell miles are also the ones who control how the public uses their miles (and in�turn how many credit card points are needed for tickets), which makes the rewards industry�a very profitable enterprise for them.

Imagine if you were in the manufacturing business and your product was manufacturing�shoes, and not only do you manufacture shoes and sell them to retail shoe vendors (in our�example airlines selling miles to the credit card companies) and individuals (in our example�frequent flyers) but as part of your terms and conditions when selling your shoes, you leave�yourself the ability to determine what and when they could be used for. And that if later�down the road you decide you hadn�t made enough money when you sold the shoes�originally, you can change the price of the shoes so that it affects people retroactively, (in�our case, changing how many miles are required for a certain tickets, after people have�already accrued those miles).

If this isn�t a sweet business model, we don�t know what is.

In fact, a study by IdeaWorks, a company that analyzes the airline industry, estimates that�more than %55 of airlines revenues results from the sale of frequent flyer miles. So the�airlines make the bulk of their money just from selling the miles and make even more�money by restricting how they can be used, including limiting how many seats can be�purchased with miles, leaving themselves blackout dates for using miles, and charging fees�for mileage tickets. Additionally, what this means for the consumer is that since it�s in the�best interest for the airlines to control and limit the value value frequent flyer holders receive�when they redeem their airline miles, the redemption process the airlines make you go�through to redeem miles for travel is quite difficult for the average consumer, thereby�eliminating a large percentage of people who would otherwise use their miles for flights.

Let�s take some examples, including one that hits close to home.

El Al Airlines had two great partnerships that the Jewish consumers enjoyed�including�their�partnership with the HAS Advantage credit card, so that cardholders could earn points�for tickets redeemable on El Al. Additionally, customers who wished to fly ELAL could do so�using American Airlines miles. In October of last year, the partnership with AA ended�suddenly. And due to a dispute with HAS, customers who earned HAS points for the sole�purpose of transferring them into flights on ELAL were suddenly left unable to do so. That�dispute is ongoing but in the interim, El Al increased the number of miles and points needed�for tickets, in some cases requiring %30 more points to book tickets from NY and Toronto to�Tel Aviv (besides for the $350 in fuel charges they charge as well).

Another example highlighting consumer frustration is British Airways (BA) partnership with�other airlines, which offered flyers�the option to travel in the domestic US using BA miles,�and which required far less miles than other airlines. And BA offered a credit card with a�bonus promotion of 50,000 miles which many people signed up for.

But early this year, BA implemented�drastic changes to the new British Airways redemption�program, increasing mileage ticket prices by as much as 150% on flights from New York to�Los Angeles and London, with tickets from Miami and Berlin increasing significantly as well.

And if you think all of the above is unfair and unethical and perhaps illegal, a FL�congressman agrees with you, and has placed the airlines habit of devaluing miles under�investigation.

This leads us to our final point, eloquently summarized by one savvy travel blogger.�Whichever kind of card you have, �redeem early and redeem often�at least once a year.���Minimize the amount of miles you have sitting around.�

Because holding on to your airline miles and credit card points are a bad idea and bad�investment!

Eli Schreiber is a partner and director of marketing at Get PEYD and PEYD Travel llc�Visit www.getPEYD.com for more information.