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MSN Money recently had a story about how a third of the loyalty rewards points Americans earned go unused–a loss that averages $205 per person per year. That’s a lot of dough to just let expire.

Here’s how to make sure you’re not letting free money slip through your fingers:

Keep track. Just as it’s easier to monitor all your financial accounts if they’re aggregated on one Web page, it’s a lot easier to keep track of your loyalty rewards programs when you can see them at a glance and they’re automatically updated. I use TripIt Pro to track my travel-related points and miles, but also recently signed up for UsingMiles.com, a site that promises to help me use those rewards to find flights, hotel rooms and upgrades. Another site to check out is AwardWallet.com, which specializes in alerting you when your points and miles from a wide variety of programs are about to expire.

Know their value. When researching free travel, UsingMiles.com simultaneously shows you the lowest cash price for the same flight or hotel room, which can help you decide whether you’re getting good value for your points. That’s something you should check anytime you’re considering cashing in rewards. For example: we’re getting an exchange rate of nearly 4 cents per point by using Starwood Preferred rewards to pay for our hotel on an upcoming Hawaii vacation. When I looked into using Starwood points for a recent weekend jaunt, the exchange rate would have been less than a penny per point, so I paid cash instead. Likewise, airline miles typically have the most value when you can use them to upgrade to business or first class on an international flight. You’ll often get a worse-than-average exchange rate on short-haul domestic trips. Using miles for merchandise often results in a horrible exchange rate of half a cent per mile, or less. Keep that as a last resort option for points that are about to expire and that can’t be transferred or resuscitated. Speaking of which:

Keep them from expiring. Some rewards points are use-’em-or-lose-’em, but many programs now have alternatives that can keep your points alive longer. If you buy a few miles or use the program’s online mall to shop, you may be able to extend the due date. Check each program’s Web site for details.

Cash them in. Points and miles lose value pretty quickly as providers constantly ratchet up the “cost” of free travel and other goodies. There’s nothing quite like closing in on 40,000 miles only to have the airline jack up the cost of a free flight to 45,000–or twice that for peak-time travel. You’re likely to get the best value by either planning 6 to 9 months ahead, or using them at the last minute, when the airlines try to fill the last empty seats.

Rescue orphaned miles. Randy Petersen’s WebFlyer.com site has an excellent Mileage Converter calculator that can show you how to transfer miles and points between many programs. I used it to shepherd some points from Continental’s OnePass program which had languished for years into our Amtrak Guest Rewards accounts, where they’re far more valuable. It’s not unusual to get an exchange rate of 5 or 6 cents per point when you use rewards to pay for a roomette or bedroom on the train. If you can’t transfer miles and you’re a few shy of being able to cash them in, it can make sense to buy a few miles to make them useable. (United and British Airways are among the programs that don’t let you move miles out.)

Consider your alternatives. If you have lots of miles and points in lots of different programs, it may be time to rethink your strategy. It’s typically best to consolidate your travel with one airline and its partners and one or two hotel chains. There’s less hassle tracking your rewards, which reduces the risk of having them expire, plus you’ll earn points and upgrades faster. If you don’t travel much, on the other hand, you might find you’ll earn more by switching from a travel rewards card to a more general cash-back rewards card.

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