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7 ways rewards cards can trim holiday costs

Pay for gifts with points, save at shopping portals, fly home on your miles

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How rewards cards can cut your holiday costs
How rewards cards can cut your holiday costs

If you’re on a budget heading into the holiday season, that rewards card in your wallet can help you trim costs while you deck the halls. 

Credit cards and holidays savings make an unlikely pair because many consumers pull out plastic for holiday spending only to end up snowed under by debt in January. In fact, 1 in 6 parents admit they will take more than six months to pay off credit card holiday spending, according to T. Rowe Price’s eighth annual “Parents, Kids and Money” survey, released Nov. 1.

But when used wisely, credit cards can help you avoid, not pile on, holiday debt. With a little planning, the rewards you’ve already racked up and those you earn by charging holiday gifts, can help you celebrate the holidays without breaking the bank. 

Here are seven ways you can use your rewards cards to cut holiday costs this year: 

1. Pay for gifts with points.
Consumers will spend about $589 on gifts for the holiday, according to the National Retail Federation's 2016 holiday survey. By redeeming points you’ve racked up all year, cardholders can put some presents under the tree, essentially for free.

One caveat: Redeeming your points for travel is a better value than cashing them in to get gift cards and merchandise, says Daraius Dubash, co-founder of Million Mile Secrets.

“But there are times in everyone’s life when saving cash is more important than travel,” he adds.

You can stretch your rewards card points further if you look for deals from issuers, such as a $30 gift card for $25 worth of points, says Shelley Hunter, the “Gift Card Girlfriend” at GiftCards.com.

Added bonus: You should be able to get the gift cards shipped to you free, which saves gas money and the stress of braving the holiday crowds, she says.

2. Use miles to fly home for the holidays.
There’s no place like home for the holidays, and you can save hundreds of dollars by using airline miles to make the trip.

When you’re trying to use miles to book travel around Thanksgiving, Christmas and New Year’s, flexibility is key, says Emily Jablon, the other co-founder of Million Mile Secrets.

With category bonuses, you can really maximize your holiday spending.

— Emily Jablon
Million Mile Secrets

For example, she recently priced tickets for Thanksgiving and found that the number of miles required to purchase a ticket nearly doubled on the most popular travel days.

When you’re searching for fares, look for a button to click to view the “cheapest fare calendar” so you can see which days are least expensive to travel, Jablon says.

3. Shop card issuer portals. 
Use your card issuer’s shopping portal to buy everything from gifts to Christmas lights to a new outfit for your holiday party – and ring up bonus points while doing so.

With portals, you shop as you normally would, but you earn two to five times as many points – or more. This will turn your spending in the coming months into bigger rewards you can cash in later.

“When you’re shopping for Christmas, maximize your earnings,” says Rosemarie Clancy, vice president of content and marketing for RewardExpert, which helps consumers make the most of their miles and points.

With portals, “Your rewards can add up superfast,” Jablon says.

CreditCards.com 2016 Holiday Shopping Guide

Go to "2016 holiday shopping guide"

4. Give an exclusive experience for free.
Tired of trying to find a gift for that hard-to-buy-for relative or friend? Consider giving that loved one an experience that can be purchased with points.

For example, Chase offers an array of experiences in its Ultimate Rewards portal. A gingerbread house decorating session for parent and child in the New York Jets’ training facility costs 9,000 points, and two prime seats at the Radio City Rockettes’ Christmas Spectacular goes for 40,000.

“If you know a couple is visiting New York, you might be able to get them a bicycle built for two to ride through Central Park,” Jablon says.

5. Get a new 0-percent interest card.
You can finance your holiday spending for free if you apply for a rewards card that offers a 0 percent promotional APR on purchases. This allows you to “spread out the cost of the holidays over many months,” Clancy says.

For example, the Capital One VentureOne rewards credit card offers 0 percent interest on purchases for a year, and the Citi Simplicity card offers 0 percent for 21 months.

But be sure to pay off the card before that 0 percent term ends. “You’re never going to get ahead if you’re paying 20 percent interest after that promotional period is over,” Dubash says.

6. Use holiday shopping to meet spending requirement on a new rewards card.
Many rewards cards offer sign-up bonuses worth hundreds of dollars, if you spend a certain amount within a few months after opening the account. Our October 2016 survey found six cards with sign-up bonuses worth more than $1,000.

For example, the Capital One Venture Rewards offers 40,000 miles if you spend $3,000 in the first three months, and the Chase Sapphire Preferred card dangles 50,000 points if you spend $4,000 in the first three months.

And, of course, the new Chase Sapphire Reserve has a whopping 100,000-points sign-up bonus if you spend $4,000 in three months.

I always get a brand spanking new card around the holidays.

— Rosemarie Clancy
  RewardExpert

“I always get a brand spanking new card around the holidays,” Clancy says.

The holiday season is a good time to apply for a card with a sign-up bonus because it may be easier to meet the spending requirement, she adds.

7. Boost your cash back on holiday spending.
If your rewards card offers more points per dollar in rotating quarterly categories, shop retailers in those categories for your gifts.

This holiday season, the Discover it Cash Rewards card is offering 5 percent cash back on your first $1,500 in purchases at department stores, Amazon and Sam’s Club. And Discover is matching first-year cash back for new cardholders.

Through the end of the year, the Chase Freedom card is offering 5 percent cash back for purchases at department stores, wholesale clubs and drugstores.

“With category bonuses, you can really maximize your holiday spending,” Jablon says.

Additionally, signing up for a Sam’s Club MasterCard now through Nov. 12 will get you double cash back for the first 90 days. The card typically earns 5 percent cash back on gas, 3 percent on dining and travel and 1 percent on all other purchases. 

If you use these holiday shopping tips strategically, you might get the biggest reward of all: starting out the New Year free from credit card debt. 

See related: 6 cash back cards to use for holiday shopping, 9 tips for sticking to a holiday budget

Published: November 4, 2016


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Updated: 12-03-2016


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