The holidays are a time for family, friends, overeating and unfortunately for some, overspending. In fact, consumers say they expect to spend an average of $967 this holiday season. So, if there were a way to make your spending go further, wouldn’t you want to know?
The good news is your credit card could be the key to a successful holiday mission. Using the right credit card for the right purchases can help you be smart with your money during the holidays, and you’ll feel better about your finances going into the new year.
Use What You’ve Already Got
One smart tactic is to use your existing credit card rewards to redeem or purchase gifts. This can save you money up front since these rewards are already yours.
“Rewards programs come in many shapes and sizes. Most allow you to get cash back or points that can be redeemed for merchandise, airline miles, experiences and more,” said Matt Freeman, head of credit card products at Navy Federal Credit Union. “Using those rewards for gifts or cash back during the holidays as an easy way to give your holiday budget a break.”
Your point balances will show you how many points you’ve earned and what you’re able to redeem. With just over 30% of Americans failing to redeem their credit card rewards, you may have a sizeable stockpile.
And remember, if you’re struggling to figure out how to use your points, keep it simple and get a gift card – after all, gift cards remain the most popular item on wish lists for the eleventh-year in a row.
Online Shopping Malls
To earn more rewards make sure you take advantage of any online shopping malls offered by your credit card issuers. You can earn bonus points, miles or cash back, for shopping at your favorite stores.
“Always take advantage of opportunities get more rewards for spending,” added Freeman. “Our Member Mall gives members access to over 900 retailers with the ability to earn up to 15x points or, cash back, for every dollar spent.”
Other perks from online portals can include exclusive offers and even free shipping from select retailers. Check to see what’s available to you by visiting your issuer’s online shopping mall.
New Card, New You
Around the holidays, you’ll likely find many credit cards offer significant sign-up bonuses, but be cautious! You should understand all the terms and conditions of the card and its offer before signing up.
Typically, a sign-up bonus requires you spend a certain amount in a given time. Make sure you’re comfortable with the spending required to receive the bonus. You don’t want to end up with a balance you can’t pay down. And if you don’t reach the spending limit, you can risk losing the bonus.
Other cards offer zero percent APR (Annual Percentage Rate) on select purchases - these can last anywhere from twelve or eighteen months. This can be a great way to pay down those larger ticket items, and avoid high interest charges. But even with a zero percent promotion, remember, before making any purchases, create a pay back plan that outlines how much you’d owe each month. That will you make sure to stay within your budget.
Bonus Tip: Think twice about store cards this year! They can be tempting, but most typically have extremely high interest rates, fairly low credit lines, and limited rewards options, if any at all. So, think long and hard before taking an inquiry on your credit to open one.
Bottom Line: When you’re creating your holiday shopping strategy, don’t just think about credit cards in the traditional sense. They can be used to redeem gifts, dole out bonus rewards and even get you limited zero percent APR! Take time to research and understand how your credit card rewards work. It will be worth it in the end.
Now back to family, friends and overeating.