Leveraging your credit card spending to earn perks and rewards could be a handy money savings tool — especially during the holidays when spending goes next-level. If you’re similar to the average American, you’re likely to spend a little over $1,000 this holiday season. Why not earn credit card rewards while you’re at it? Just remember that this strategy is only beneficial if you pay your balance off in full every month. Otherwise, the finance charges will outweigh any points and rewards you may earn.
- What Are Credit Card Rewards?
- Take Advantage of Sign-Up Bonuses and Intro APRs
- Use the Right Card for Your Purchases
- Plan Gift Card Shopping Strategically
- Use Store Credit Cards To Build Retail Rewards
- Remember: Credit Card Rewards May Not Be All That Rewarding
- Holiday Credit Card Spending Can Work for You
Certain credit cards offer perks known as credit card rewards. But not all rewards are created equal. For example, some cards offer cash back on spending, whereas others offer points you can use toward travel or redeem for items or experiences through online shopping portals. Besides earning cash back or points, most rewards cards also offer additional perks like no foreign transaction fees and extended warranty protection.
Rewards are typically earned as a percentage of your card spending. For example, with a cash rewards card that offers 1% cash back, you’ll earn $2 on a $200 purchase. And with a points reward card that offers 2 points for every dollar spent, you’ll earn 400 points on a $200 purchase.
You can earn free travel and cash back on items you may have purchased anyway. Holiday spending can boost the number of points or cash back you earn, but there is also a danger, as it can blow your budget. Use a two-point approach to holiday shopping by strategically earning cash back and points while choosing to redeem your rewards to fund your holiday spending and gifts.
Most cards offer a signup bonus after you spend a certain amount to gain you as a loyal customer. Bonuses come in the form of:
- Low or 0% APR on balance transfers and purchases for qualified applicants for a limited time
Here’s more about each type of bonus offer and how you can leverage them this holiday season.
Travel rewards cards commonly offer points that can be redeemed for travel when you earn points per $1 spent. The best cards offer you a large number of bonus points at signup that are worth a free plane ticket. Use your card to earn faster this holiday season and redeem your points for plane tickets to visit family or gift a loved one a free hotel stay or trip.
Cash rewards cards offer you cash back on spending after you spend a set amount. Use your cash-back reward to pay your credit card balance during the holidays or redeem as gift cards to give as Christmas gifts. Start this year, and you may have enough cash accrued to fund all of next year’s holiday spending.
A sign-up bonus of no interest over a set period of time is a great perk, especially if you foresee purchasing expensive holiday gifts like electronics. Signing up for a 0% APR card for the holidays allows you to pay back the holiday-related increase in spending over a longer period — like 12 months — without having to worry about interest charges.
If it’s too late and you already have a large balance running on a credit card, you can take advantage of introductory 0% APR balance transfers to pay off your other credit card’s balance interest-free.
Take a quick look at the following credit card offers for an idea of what type of sign up bonuses are currently available:
|Best Holiday Credit Card Sign-Up Offers Card|
|Capital One Venture Rewards Credit Card||Points||Sign-up bonus of 50,000 points after spending $3000 within first three months; $95 annual fee waived the first year|
|Chase Sapphire Preferred Credit Card||Points||Sign-up bonus of 60,000 points after spending $4000 within the first three months; $95 annual fee waived the first year|
|Chase Ink Business Cash Credit Card||Cash back||$500 cash-back bonus after spending $3000 within 90 days after account opening|
|Bank of America Cash Rewards Credit Card||Cash back||$200 bonus cash back after spending $1000 within first three months|
|Discover it Cash Back Card||Low or 0% APR||Intro APR of 0% for 14 months on purchases and balance transfers|
|Wells Fargo Platinum Card||Low or 0% APR||0% intro APR on purchases for 18 months|
Compare: Best Debit Card Rewards Program
Using the right credit card at the right store will boost your credit card rewards faster when you’re gift shopping. There are a few steps, however, which you can take to know which card is best. Here’s a closer look at how to use the right card for your purchases to maximize savings and rewards.
Credit Card Rewards Audit of Your Wallet
Do a rewards audit to decide which of your cards are currently offering the best rewards and keep those in your wallet. You can also manage which card is best for your spending and rewards needs by downloading a personal finance app, such as Birch or AwardWallet.
As with any product or service, shop around before choosing one of these apps because they may vary in their features. For example, Birch tracks your spending and rewards and suggests which of your cards is best for maximum rewards. AwardWallet, like Birch, tracks your spending and rewards but does not offer suggestions about which card to use to reap the most rewards.
Analyze Your Spending Habits
Review what you typically spend money on throughout the month, as well as what type of gifts you’ll be shopping for to help you choose the right card. For example, if you’re an Amazon Prime member and plan on doing most of your holiday shopping online, the Amazon Prime Rewards card is a great way to earn extra cash back on your purchases. You’ll get 5% back for Amazon and Whole Foods purchases and a $70 Amazon gift card at signup.
Take Advantage of Reward Card Spending Category Bonuses
Certain rewards cards offer bonuses on spending categories like gasoline, grocery stores or department stores. So don’t leave money on the table. Instead, use the best card for the retailer or category that gives you the most reward. For example, the Chase Freedom Card is currently offering 5% back through December on department store and PayPal purchases, just in time for the holidays.
Everyone loves a gift card during the holidays. It’s the easiest gift to give when you’re not sure what to buy someone. And the recipient will be happy to choose what they want or need most. Being strategic with your gift card shopping can earn you rewards and savings faster.
For example, the American Express Blue Cash Preferred Card offers 6% cash back at grocery stores. Buy your gift cards at a grocery store using this Amex to essentially get a $50 gift card for $47.
Traveling Soon? Best Travel Cards of 2019
If you’re loyal to a specific department store or a retailer like Target or Walmart, use a store credit card to accrue rewards over the life of the account. Here’s a quick look at the best store credit cards to build retail rewards:
Some of the Best Store Credit Cards for Rewards
|Amazon Prime Rewards||5% back for Amazon and Whole Foods purchases; $70 Amazon gift card at sign-up|
|Costco Anywhere Visa Card by Citi||4% cash back on Costco gas; 2% back on Costo store and online purchases|
|Gap Visa Card||5 points for every $1 spent at Gap brands|
|Target REDcard||5% cash back on all Target store and online purchases|
|Walmart Capital One Rewards Card||5% cash back through Walmart.com and the app; 2% cash back for Walmart store purchases|
Also See: Best Store Credit Cards
Using your rewards cards regularly to earn points or cash rewards is a great way to save money and earn free travel — if used responsibly. Unfortunately, irresponsible use of a credit card, such as spending excessively or not paying on time, can result in extra fees, interest charges and even negatively impact your credit score.
- Spending more than you normally would to earn points
- Not paying off full card balance each month; you could negate the value of any rewards
- Not paying off full balance during card’s 0% APR introductory offer period
- Making late payments
- Forgetting to make payments on time or carrying a high balance
Read More: How To Pay Off Holiday Card Debt
Using your rewards cards the right way can help you survive all the extra spending during the holidays. Earn rewards faster by knowing which card is best for the type of purchase. Take advantage of bonus reward opportunities to boost your points and cash-back possibilities. And give your budget a break by using the points and cash savings to fund your holiday shopping this year and the next.
Check out the top 10 most exclusive black cards you didn’t know about.
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