What are the Best Credit Cards for Holiday Shopping?
According to the National Retail Federation, nearly 164 million Americans plan to shop during Thanksgiving weekend. While on this shopping spree, which will last from Black Friday through Cyber Monday, shoppers said they plan to spend, on average, $967.13. Using this average, the NRF estimates that holiday retail sales should increase between 3.6% and 4% from last year, which means between $678.75 and $682 billion in revenue for retailers.
If you are one of the millions hitting stores or online retailers next weekend, you may be wondering which credit card to use. We have broken down what you should look for when choosing your holiday shopping credit card.
Credit Cards with Rewards You Will Use
The best credit cards have rewards that you will actually use. Recent research from Bankrate found that 31% of cardholders are not using these rewards. Make sure to use the rewards you have earned since they are a great way to earn cash back and airline miles. This is a good time of year to open a credit card with an introductory bonus, as you will likely be spending more money than normal and can earn special one-time rewards points. The Chase Sapphire Preferred credit card, for example, offers 50,000 in rewards points when you spend $4,000 within the first three months, and there is no annual fee for the first year. This can translate into massive cash back rewards, which will make holiday shopping a bit less painful.
0% APR Cards
If you have excellent credit, you may qualify for a card that offers a 0% introductory rate. These can be especially helpful if you have a tendency to overspend during the holidays, as you can pay back the money with no interest for a period that typically ranges from a year to 18 months. Just make sure you create a realistic payment plan so you do not end up paying a high interest rate when the introductory period ends.
Store Credit Cards
If you like to do all of your shopping with one retailer, you may want to consider a store credit card. Amazon offers its Prime members a credit card with 5% cash back on all purchases and a number of other perks, but keep in mind Prime membership costs $99 a year, which can be a costly fee if you do not shop with Amazon year-round. Target also offers a 5% discount on in-store and online purchases, and Redcard holders get special access to Black Friday deals.
Before opening a store credit card, though, make sure you read the terms and conditions carefully. Some charge an annual fee, and they also typically have low credit limits. If you get too close to this credit card limit, it can negatively impact your credit score. Additionally, these types of cards generally have higher APRs than traditional credit cards. The interest rate on most hovers at 25.99%, compared to 16% for other credit cards. Thus, if you plan to carry a balance, this can be a costly option.