Many Americans rack up credit card debt over the holidays, with the average debt exceeding $1,000, according to a 2017 survey by MagnifyMoney. However, if you use your credit cards wisely this season, you can actually save money.
GOBankingRates asked shopping experts to share their favorite credit card hacks. From shopping for gifts to booking travel, there are many ways your credit cards can help you make the most of your money.
Last updated: Dec. 3, 2019
Sign Up for a New Credit Card
Now could be a great time to take advantage of a sign-up bonus, especially if it’s a card that requires you to spend a minimum amount in the first three months of opening.
“The additional holiday expenses could help you reach a sign-up bonus you wouldn’t typically reach during the rest of the year,” said Patrick Beckman, contributing finance writer with RAVE Reviews. “A sign-up bonus will always earn you the most value for every dollar you spend.”
Compare offers to find the best credit card bonus with a minimum spend that you can realistically hit.
Also Look For Credit Cards That Offer 0% APR on Purchases
If you open a new card, look for one that offers a 0% annual percentage rate on purchases as an introductory offer. You should be able to pay off your balance in full every month — even during holiday shopping season — but this will keep you from getting hit with high-interest rates on any leftover balances in case you can’t.
Use Store Credit Cards To Get Discounts and Rewards
Using a store credit card can be one of the best ways to save money when holiday shopping.
“If you purchase a lot of items from a specific store, then it may be a good idea to open up a credit card with them,” said Jessica Myers, owner of the blog Now That’s Thrifty. “Frequent shoppers tend to earn a lot of points that can get them some great benefits like discounts and money towards your next purchase.”
Lisa Weiler, a shopping expert and blogger at Pumping Mamas, swears by her Old Navy credit card for holiday shopping purchases.
“By being a card member, I receive different daily deals from Old Navy that are only for cardmembers, and I earn super cash and an extra 5% cashback,” she said.
On a recent shopping trip, Weiler purchased matching family pajamas for herself, her husband and her daughter, plus cozy socks for her husband and daughter for Christmas. Her credit card gave her access to deals for $1 cozy socks and 40% off her entire purchase.
Shop With a Cash-Back Card
When you shop with a cash-back credit card, you automatically get money back with every purchase. Some cash-back cards offer higher cash-back percentages based on the purchase category, so keep this in mind when deciding which cash-back card to use for your holiday shopping purchases.
Use the Chase Freedom Card When Shopping at Department Stores
Some cards offer special cash-back offers for department store purchases. If you plan to do your holiday shopping at these stores, consider this tip.
“Make purchases with a card that offers at least 5% cash back for your holiday shopping,” said Beckman. “Chase Freedom offers 5% cash back (on up to $1,500 of purchases) at department stores and purchases made using PayPal or Chase Pay.”
You need to activate this cash-back category by Dec. 14 to get the high cash-back bonus.
Use the Discover it Cash Back Card To Shop at Amazon, Target or Walmart
Beckman recommended using the Discover it Cash Back credit card when holiday shopping through Amazon, Target or Walmart.com. The card offers a 5% cash-back bonus on purchases made at these retailers from October through December.
Earn and Save on Other Items: Best Travel Credit Cards
Shop With a Rewards Credit Card
Shopping with a rewards credit card can help you save big on future purchases.
“The best way to take advantage of credit cards over the holidays is to maximize reward points,” said Ben Packard, CEO of Thrifty Points. “The holidays are an expensive time of year, and we’re all spending money left and right. Using a reward card to manage your holiday spending is like getting an extra present under the tree.”
Redeem Rewards for Gift Cards or Travel
You can cash in rewards points for gift cards for your holiday shopping or for travel rewards to book your holiday travel. These rewards categories might be a better use of your rewards points than cash back, depending on your card.
For example, with the Amex EveryDay Credit Card, 10,000 Membership Rewards Points can be redeemed for up to $100 in gift cards or $100 toward flights. It’s only worth $60 if you use it to pay your card charges.
Use Credit Card Points To Shop on Amazon
Alternatively, you can use your credit card points to shop Amazon directly. Many credit cards allow you to link your points with the online retailer, including American Express, Hilton Honors, Chase, Citi and Discover.
Use Your Companion Fare for Holiday Travel
Holiday travel is notoriously expensive, so now could be a good time to cash in on any credit card fare discounts you might have. The Alaska Airlines credit card allows you to purchase a round-trip plane ticket for a companion traveling with you for as low as $121. And the Hawaiian Airlines Mastercard allows you to get a 50% discount on a round-trip companion fare.
Use Cards That Offer Price Protection
It’s frustrating to buy someone a pricey gift only to see the price drop dramatically after Christmas. Although it’s become increasingly rare, some cards offer price protection, which can end up saving you a ton — especially on your holiday purchases, as prices do tend to drop after Dec. 25.
One card that still offers price protection is the United Club Card. This protection can reimburse you for the difference when a price drops within 90 days of your purchase.
Use Cards That Provide Purchase Protection
Many cards come with purchase protection, which means you will be reimbursed if a product gets damaged or stolen during a given period of time. For example, the Chase Sapphire Preferred credit card covers new purchases against damage or theft for 120 days, up to $500. Consider using a card with this protection on gifts you buy online — it can protect you in case your items get damaged during transit or stolen from your front door.
Shop With Cards That Offer Extended Warranty Protection
Purchase big-ticket items with a card that offers extended warranty protection.
One card that includes this perk is the Costco Anywhere Visa Card by Citi, which adds an extra 24 months of protection to a manufacturer’s warranty when you make a purchase with the card. You can be reimbursed for the cost to repair or replace the item up to $10,000.
Use a Mastercard To Purchase Gifts for Picky People
One of the shopping protection perks offered by Mastercard is a satisfaction guarantee. With this protection, if you — or the picky person you bought the gift for — decide you aren’t satisfied with a product and the store allow you to return it, Mastercard may refund you up to $250 for the item if you file a claim within 60 days of the purchase.
Check These Out: Top 10 Most Exclusive Black Cards You Didn’t Know About
Use a Card With Zero-Liability Protection
Many credit cards — including Visa cards and Mastercards — have zero-liability policies that protect cardholders from fraudulent purchases. If someone steals your card number and makes authorized purchases, you can dispute the charge and get your money back.
Stack Credit Cards With Cash-Back Sites To Save Even More
If you’re shopping online with a retail, cash-back or rewards credit card, you can save even more if you shop through a cash-back site or a cash-back app.
“I combine [store credit card] deals with making my purchases through Rakuten.com to get even more cash back,” Weiler said. “Since signing up, I’ve received $1,401.14 cash back from Rakuten.com.”
Don't Overdo It
The higher the balance you rack up, the higher your credit utilization ratio — and that has a big impact on your credit score. Keep in mind that a lower credit score means you can get hit with higher interest rates when taking out a loan, so putting too much on your card can end up costing you in the long run.
Never Charge More Than You Can Afford
Using credit cards will only save you money if you don’t get slammed paying off high-interest debt.
“Make sure you are not charging more than you can afford,” said Myers. “Credit cards only save you money if you pay your whole credit card statement before you incur interest on it.”
Create a Repayment Plan
If you do end up charging more than you can pay back right away, come up with a plan to pay down your credit card balance as soon as possible. This can include cutting back on expenses and funneling that extra money to your credit card bill, or taking on a side job to earn extra cash to pay off your debt.
If you’re stuck paying off high-interest credit card debt over a long time period, it effectively cancels out your savings and rewards. Keep this in mind to help you stay focused and stick to your holiday budget.
More From GOBankingRates
- Your Best Age To Retire
- Best Credit Unions Anyone Can Join
- Best Store Credit Cards
- 16 Effective Ways To Trick Yourself Into Saving Money
Credit card offerings are subject to change.
This content is not provided by American Express. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone and have not been reviewed, approved, or otherwise endorsed by American Express.
About the Author
Gabrielle joined GOBankingRates in 2017 and brings with her a decade of experience in the journalism industry. Before joining the team, she was a staff writer-reporter for People Magazine and People.com. Her work has also appeared on E! Online, Us Weekly, Patch, Sweety High and Discover Los Angeles, and she has been featured on “Good Morning America” as a celebrity news expert.