Save on Holiday Shopping Using Credit Card Rewards
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The holidays are here, and soon consumers will be hitting the malls and emptying their wallets. Last year, consumers spent an average of $786 on holiday gifts.
According to the National Retail Federation’s holiday spending survey, nearly 75% of the expenditures will be made with plastic. 43.7% will rely on debit cards as their primary form of payment, 28.5% will use credit cards, 25.4% will use cash and 2.4% will use a check.
If you do plan on paying with a credit card, you can save money by using reward cards to help pay for holiday shopping:
- Use your reward points as currency to buy gift cards or merchandise offered through partner programs. The programs vary by issuer, but the partners could be stores where you already shop. Discover increases rewards from partners including AMC Theatres, Red Lobster and Lowes. Citi gives an additional 10% in points with Citi Easy Deals.
- Look for 5% rotating cash back offers. Chase Freedom and Discover It offer an attractive five percent back on spending in designated categories during a certain period of time. The October-December bonus categories for these issuers focus on shopping and entertainment. Chase offers 5% back on up to $1,500 spent at Amazon.com and select retailers. Discover offers the same for online shopping. If you have these cards, remember to sign up for these attractive rebate offers each quarter since enrollment is not necessarily automatic.
- Check for cash back bonuses on new accounts. A number of cards offer up-front cash back bonuses to new cardholders, and the increased spending during the holidays are the best time to quickly reach these spending tiers. In nearly every case, the consumer needs to spend a certain amount of money on the card during the first three months of being a cardholder. Examples of cards with up-front bonuses include Chase Freedom ($200 bonus if $500 is spent within three months), Capital One Venture One (10,000 miles if $1,000 is spent within three months), Citi Dividend Platinum Select ($100 bonus if $500 is spent within three months), Bank of America® Cash Rewards ($200 bonus if $1,000 is spent within 90 days) and Blue Sky from American Express (7,500 Blue Sky Reward Points after you use your new Card to make $1,000 in purchases within the first three months).
- Pay attention to reward limits. Some cards have a limit on the bonus. As an example, the Discover It card offers 5% cash back but only on the first $1,500 in purchases each quarter. After you reach the rewards limit on one card, stop using that card and switch to another card in order to maximize your rewards.