With the right card, you can save even more on Black Friday and Cyber Monday than you would taking advantage of stores’ discounts alone. But do you have that ideal card now, or is it time for a new one?
With the right credit card, you can save even more on Black Friday and Cyber Monday than you would taking advantage of stores’ blowout discounts alone. Combine the deals and steals from retailers with cards’ rewards points, cash back offers and sign-up bonuses and the biggest shopping day of the year won’t make a huge dent in your budget. It could very well give you a leg up on your finances for the new year.
But do you have that ideal card in your arsenal now, or is this the time to apply for a new one? Here are some reasons to consider getting a new card for Black Friday, along with a few reasons to pass.
3 reasons to get a new card for Black Friday and Cyber Monday
1. It can boost your savings on holiday shopping
If you’re planning to do a lot of your holiday shopping on Black Friday, you’re likely already looking forward to steep discounts. But those purchases can earn more for you if they’re made with a cash back or rewards card.
Just in time for the Black Friday through Cyber Monday shopping bonanza, Chase Freedom recently announced its cardholders can earn a 5 percent return on buys at department stores and wholesale clubs (on up to $1,500 in purchases) through Dec. 31, 2018.
Additionally, Discover it Cash Back cardholders can earn 5 percent cash back on up to $1,500 in department store and Amazon.com purchases through Dec. 31, after they activate the bonus categories.
Although not a brick and mortar store, Amazon offers lots of deals on Black Friday and beyond. If you own an Amazon Prime Rewards Visa Signature card (you must first be an Amazon Prime member), you get 5 percent cash back on all your Amazon.com purchases with no limits or rewards caps.
2. You can quickly earn a sign-up bonus
Many cards offer generous sign-up bonuses that require a certain amount of spending within a set time frame. If you’re already planning a big Black Friday spend, you can put all or most of it on your new sign-up bonus card and increase your savings, earn points for more holiday shopping later or fund a holiday trip or vacation.
For example, the Chase Sapphire Preferred Card offers 60,000 bonus points after you spend $4,000 in the first three months of membership. When you redeem through Chase Ultimate Rewards, that equals $750 toward travel.
Similarly, Capital One Venture Rewards Credit Card cardholders earn 50,000 miles after spending $3,000 within three months of approval. The card offers 2X miles on all purchases, and 10X miles if you book and pay for a hotel room at Hotels.com. The Venture card’s $95 annual fee is waived in the first year.
If you don’t plan to spend thousands of dollars on Black Friday, or if your purchases likely won’t get you over the hump for a large sign-up bonus, there are other cards that offer bonus points for more modest spending.
The Bank of America Cash Rewards credit card offers 2 percent cash back on wholesale club and grocery purchases (along with 3 percent on gas and 1 percent on other purchases). Cardholders earn $200 in online cash rewards after spending $1,000 in the first 90 days of membership.
3. You can build credit
Consumers who recently started building credit might want to give it an extra push by using a credit card for their Black Friday spending.
Many college students fall into this category, says Joe Conroy, certified financial planner and author of “Decades & Decisions: Financial Planning at Any Age.” And if much of your income gets spent on books, tuition and a meal plan, chances are Black Friday and Cyber Monday discounts are key to your holiday shopping plans.
If you’re a college student with little credit card experience, you may be able to qualify for the Discover it Student Cash Back card, which offers 5 percent on Amazon.com and department store purchases through Dec. 31, after you activate.
If you have fair credit (a score of 580-669) you may be able to qualify for the Capital One QuicksilverOne Cash Rewards Credit Card. It earns unlimited 1.5 percent cash back and has a manageable annual fee of $39. You can also increase your credit limit after five months of on-time payments.
Why you shouldn’t get a new card
Not everyone should apply for a new credit card just for holiday shopping. If you already have too much card debt or you feel you’ll be tempted to overspend on Black Friday and Cyber Monday with a new card in hand, pass on it.
Additionally, if you think your new card application may be denied due to the state of your credit, work on improving it. That could mean lowering your credit utilization by paying down your balances or checking your credit report for possible errors. (You can get a free copy of your credit report from each of the three major credit bureaus – Equifax, Experian and TransUnion – per year at AnnualCreditReport.com).
And if you feel your income level won’t pass muster with a prospective card issuer, wait until you’re earning more or you have steady paychecks coming in before you even consider getting a new card.
Finally, if you own a card on which you’ve already accumulated a large bounty of reward points or cash back, perhaps it’s better to stick with it instead of potentially diluting your rewards earnings with another card.
If you get a new card, review the terms and watch your spending
Make your decision only after you’ve taken the time to fully research and understand a new card’s interest rates and fees.
Andrea Woroch, a consumer finance expert in Bakersfield, California, urges consumers to read the terms of the card before signing up. Is there an annual fee? How much is it? Will it make the rewards not so rewarding? There are many no-annual-fee cards on the market that offer generous rewards and sign-up bonuses.
How much are the penalty fees? What are the restrictions on redeeming your rewards? Also, know when your rewards points expire so you don’t completely lose them.
After you get the card, the issuer may change the terms, like lowering the number of points you can earn or decreasing the cash back amount. Usually, you’re notified through postal mail – in a small font that you may or may not read – but be aware.
Don’t be tempted to buy more than you can afford, just to earn more rewards during the holidays, warns Jason Gaughan, consumer card product executive at Bank of America. Only spend what you can pay off in a billing cycle or two.