Abstract: A computer-based method for performing an online auction of an item in which loyalty rewards points can be used as currency is presented. The method includes the following steps: Information about a large component of the auction item is displayed on a website, which allows customers to view the information over the Internet using a web browser. A bid is received from each interested customer. Each interested customer's bid can include an indication of the number of loyalty rewards points to be redeemed for the large component. A winner of the auction is selected based on the bids. For example, the interested customer bidding the greatest number of loyalty rewards points can be selected as the winner of the auction. The winner is solicited to select from a number of additional components, thereby allowing the winner of the auction to customize the auction item that is won.