More than 90 percent of Americans celebrated Christmas, Kwanzaa or Hanukkah in 2013, according to the National Retail Federation. Their spending reflected this as each celebrant spent an average of $730 during the winter holiday season.
Now will that be cash, credit or debit? “It depends on the individual,” said Brittney Castro, founder and CEO of Financially Wise Women. “You need to be really disciplined with your credit card spending and only spend what you know you can pay off in full every month. I have a lot of clients who do this successfully and maximize their credit card reward points.”
Credit cards can be useful this time of year if they are used properly. Here are the seven best credit card rewards to help you buy gifts this holiday season.
1. Chase Freedom
- Annual Fee: None
- APR: 0% APR for the first 15 months on purchases and then 13.99% APR, 18.99% APR or 22.99% APR based on credit
Rewards: Receive a $100 bonus after you spend $500 on purchases in the first three months. You always receive 5 percent cash back up to $1,500 in different bonus categories every quarter. For example, the October to December bonus categories are Amazon.com, Diapers.com, Audible.com and Zappos.com.
How to Use Rewards for the Holidays: “See if your reward points allow for cash back to help pay for gifts,” said Castro. If you order the Chase Freedom card now, you can get the $100 bonus by the time your holiday credit card bill rolls in at the end of January. The current 5 percent cash back is for online stores that you likely use, such as Amazon.com. For example, 5 percent of a $400 Amazon order gets you $20 cash back you can use toward an extra gift, or for savings.
2. Blue Cash Preferred American Express
- APR: 0% introductory APR, after APR varies based on credit
Rewards: Receive 6 percent cash back at supermarkets up to $6,000 per year in purchases (drops to 1 percent after that) and 3 percent cash back at gas stations.
How to Use Rewards for the Holidays: The Blue Cash Preferred American Express is similar to the Chase Freedom card except there is an annual fee. This card is good for families that accumulate high grocery and gas bills because of the cash back bonuses. For example, over the holidays, the average American spends $107.80 on food. So the holiday grocery bill for a family of eight will be approximately $837.92, and that gets you $50.28 cash back. If you get this card now, qualify for the bonus, and make $1,000 in purchases, you can get the $250 statement credit by the time your holiday bill rolls in at the end of January.
3. Discover It Cash
- Annual Fee: None
- APR: 0% APR for the first 12 months on purchases and balance transfers and then 10.99%-22.99% APR based on credit
Rewards: For new card members, Discover will double all of the cash back rewards you’ve earned throughout the first year. You will also receive 5 percent cash back in categories that change each quarter. The category for October through December includes Amazon.com, department stores and clothing stores.
How to Use Rewards for the Holidays: Discover It Cash Credit Card is one of the best no annual fee cash back credit cards. If you order this card now, then during this time next year you will receive twice the cash back rewards you’ve earned throughout the year. So, Christmas 2016? Already covered. However, for this year’s holiday season, the 5 percent cash back comes in handy when shopping for gifts on Amazon.com, in a department store or clothing store. For example, a $650 credit card bill spent at these places can get you $32.50 cash back.
4. Key2More Rewards MasterCard
- Annual Fee: None
- APR: 0% APR for the first six billing cycles on purchases and balance transfers made within 60 days of account opening and then 11.99-21.99% APR based on credit
Rewards: Earn five KeyBank Relationship Rewards points for every $1 in eligible purchases with no monthly maximum.
How to Use Rewards for the Holidays: “Besides cash back, you can see if your reward points can help pay for gifts or even access an online store to redeem points on gifts or experiences during the holidays,” said Castro. You can do this with the KeyBank Relationship Rewards program by scouting for presents online through the rewards website. For example, a Kate Spade New York Idiom Bangle is 27,500 points or a Canon Pixma Inkjet Photo Printer is 40,000 points.
You can also pick presents off KeyBank’s weekly shopping deals email, which earns you extra rewards points. Or, even better, just redeem your points for cash to use toward whatever you want.
5. BankAmericard Cash Rewards
- Annual Fee: None
- APR: 0% APR for the first 12 billing cycles and then 12.99-22.99% APR based on credit
Rewards: If applying online, receive a $100 bonus after making at least $500 in purchases within the first 90 days. You also get access to the BankAmeriDeals program through which you can choose the cash back deals you want when online or via mobile banking for your purchases with a Bank of America debit or credit card.
How to Use Rewards for the Holidays: Aside from the $100 cash bonus you can use toward holiday gifts or supplies, the BankAmeriDeals program can help you buy holiday gifts with special shopping deals. For example, on the BankAmeriDeals website or mobile app, you can receive rotating deals such as 10 percent off Lowe’s and 15 percent off Starbucks. Therefore, on top of the regular 1 percent cash back that this card offers, you can receive significantly higher discounts at participating retailers. As with most rewards cards, you’ll pay full price at the store and receive cash back at the end of your billing cycle.
6. Capital One Venture Rewards
- Annual Fee: None for the first year and then $59
- APR: 12.9% APR, 17.9% APR or 22.9% APR based on credit
Rewards: Receive a one-time bonus of 40,000 miles, which is equal to $400 in travel, once you spend $3,000 on purchases within the first three months.
How to Use Rewards for the Holidays: The U.S. Bureau of Transportation lists Christmas as one of the busiest travel times of the year. In fact, the number of long-distance trips — to and from a destination 50 miles away or more — increased by 23 percent during the Christmas and New Year’s holiday period compared to the national average. If you travel a lot, or plan to this season, then you could benefit from getting a travel rewards credit card. Because the 40,000 miles come once you’ve spent $3,000 within the first three months, you won’t get the points in time for this year’s holiday season; however, you’ll be setting yourself up perfectly for holiday traveling in 2016.
7. The Starwood Preferred GuestCredit Card From American Express
- APR: APR varies based on credit
Rewards: Earn bonus Starpoints after spending within the first 3 months.
How to Use Rewards for the Holidays: This is a good card for people who stay in hotels frequently. If you sign up now, you won’t get the points in time for this holiday season; however, you’ll could get completely free stays during the holidays in 2016. For example, three nights at the Four Points By Sheraton Chicago O’Hare Airport in Illinois from December 23 to December 26 is 3,000 points per night. Granted those are 2015 dates, but according to a Starwood representative, “That is par for the course.” That total stay in Chicago requires 9,000 points, leaving 16,000 points for even more holiday travel.
As the holiday season approaches, you want to ensure that you review your credit card rewards that you have built up during the year. “Most individuals accumulate points but fail to use them,” said Castro.
If it seems like cash back credit cards or rewards credit cards are not helping you buy enough gifts this holiday season, then Castro suggested setting up a holiday savings account for next year. That way, throughout the year you can put money aside and steadily save for the 2016 holiday season.
Regardless of the route you take, “it’s important to start with a holiday budget and review your spending against your budget,” said Castro. “This helps build good spending habits for spending within your means, and that’s imperative to being able to use your credit cards wisely in the future.”
All offers current as of 10/20/15.