There are ways to end up ahead on your holiday shopping with a credit card. The keys are using your card strategically, maximizing all your benefits and avoiding interest charges. Here are some of the best ways to make the most of your 2019 holiday spending with a credit card.
The National Retail Federation estimates that Americans spent an average of $1,007 for holiday gifts and décor last year. This hefty sum of money also includes funds consumers spent on themselves by taking advantage of Black Friday deals or end-of-year flash sales.
That’s a lot of cash for anyone, but the cost of enjoying the holidays can easily skyrocket if you pay with plastic and take months or years to pay down your leftover holiday balances.
Ironically, a 2018 report from MagnifyMoney showed consumers they profiled racked up an average of $1,230 in holiday-related debt last year. Considering the average credit card interest rate is well over 17 percent, it’s not hard to see how that story ends.
But credit card experts say there are still plenty of ways to end up ahead on your holiday shopping with a credit card. The keys are using your card strategically, maximizing all your benefits and, of course, avoiding interest like the plague.
Here are some of the best ways to make the most of your 2019 holiday spending with a credit card.
See related: Holiday shopping and credit card guide 2019
Earn a big sign-up bonus
Many of the top rewards credit cards let you earn 50,000 points or more when you can meet a minimum spending requirement within a few months. This may be harder to accomplish with just everyday spending during the year, but it’s possible you could easily meet the spending threshold if you get your new credit card before you start buying holiday gifts.
Which card should you sign up for? It really depends on the type of rewards you hope to earn, whether that’s cash back, travel rewards or flexible points.
Travel rewards enthusiast Kevin Payne of FamilyMoneyAdventure.com says his go-to rewards credit card is the Chase Sapphire Preferred Card, and he suggests the same card for anyone who asks. This card has a $95 annual fee, but you also earn 60,000 points worth $750 in travel when you spend $4,000 within three months.
The great thing about this card and other Chase Ultimate Rewards cards, he says, is you can book travel directly with points or transfer points 1:1 to popular airline and hotel partners. If you prefer a non-travel option, you can also redeem points for statement credits, gift cards or merchandise if you want.
See related: Beware the aftermath of holiday credit card shopping
Use shopping portals and card-related deals
Miller says another good strategy that can help you maximize holiday shopping involves taking advantage of shopping portals. With an airline shopping portal or general credit card shopping portal, you can earn additional points or miles each time you click through and make a purchase online.
Miller says he uses a website called Cashback Monitor to see which portals are paying the most before he buys something online. Also keep in mind that, right before the holidays, most airline shopping portals run holiday shopping bonuses that let you earn hundreds or thousands of bonus miles when you spend a certain amount.
With both of these options, you can find additional savings when you meet a minimum spending requirement with a specific retailer — for example, you might get a percentage of cash back (usually up to 10 percent) when you shop at stores like Michael’s or 1-800 Flowers or dine at select restaurants.
Take advantage of consumer protections
Melissa Lagerquist, who writes about frugal cruising and loyalty programs at CruiseAdvice101.com, says another strategy that can help you save money this holiday season involves taking advantage of insurance and protections your credit card offers on big-ticket items.
As an example, the popular Chase Sapphire Reserve card offers purchase protection worth up to $10,000 per claim and $50,000 per year for items purchased with your card that are damaged or stolen.
On top of that, you qualify for guaranteed returns on any items a store won’t take back. This coverage is good for purchases made within 90 days in amounts up to $500 per item, although there is also a $1,000 cap each year.
In order for your big purchases to qualify for these benefits, all you have to do is pay with a credit card that offers them.
Use a credit card as a zero-interest loan
You can also save money on the holidays this year by finding a card that lets you make interest-free purchases for a specific period of time, usually for up to a year or longer. Credit cards that fall into this category include the Chase Freedom Unlimited and Capital One® Quicksilver® Cash Rewards Credit Card, both of which give you 15 months with 0 percent APR on purchases.
The key to making the most of these offers around the holidays is making sure you’re only charging what you know you can afford to repay before your introductory offer ends. Otherwise, you’re setting yourself up for a costly debt repayment experience.
After all, the variable APR on the Chase Freedom Unlimited currently falls between 16.49 percent and 25.24 percent, depending on your creditworthiness, while the APR on the Capital One Quicksilver ranges from 15.49 percent to 25.49 percent variable.
A word of caution about mixing 0-percent APR offers with rewards
You’ll notice that some 0-percent APR credit cards offer zero interest for a limited time and rewards for each dollar you spend.
There are several reasons this can be problematic, the most important of which is the fact that your 0 percent APR offer won’t last forever. Once the initial offer ends, your credit card’s rate will reset to the normal APR, which is usually high for rewards and travel credit cards.
This is the main reason Lagerquist never advises carrying a balance on your credit card, especially if your goal is earning credit card rewards.
“If you pay interest on a rewards card, you lose the benefit of earning those rewards,” she says.
However, one situation where it could work out and make sense is when you know without a doubt you’ll be able to pay off your card within a few short months.
According to Lagerquist, “people who always use their income tax refund to pay off holiday debt could take advantage of a card that offers both rewards and a 0 percent APR.”
The best way to avoid a messy situation is to keep track of your purchases and create a plan to repay any debt you rack up, says Payne. Fortunately, you can easily do this “through your credit card’s online portal or mobile app,” he says.
Also, make sure you understand the risks of mixing rewards with 0 percent APR offers, says Lagerquist. For example, you should understand that the convenience of credit cards can make it easier to overspend.
“Don’t justify extra purchases because they help you meet a new card’s minimum spending requirement or because the card offers 0 percent interest,” she says. “Set a holiday spending budget and stick to it.”