If you've been stung by lingering credit card bills in the past, you might be hesitant to put Christmas on credit this year – or ever again. And who can blame you? Most people who have endured holiday debt know exactly how it feels to pay for Christmas long after the tree has been put away. Simply put, it stinks.
The thing is, by sticking to cash or debit this year, you could be missing out. With so many popular cash back cards offering special promotions, it's actually the perfect time to rethink your holiday shopping (and saving) strategy.
How to Earn Cash Back on Your Christmas Shopping
Case in point: The Chase Freedom card is offering 10% cash back on the first $1,500 spent in its quarterly bonus category through December 31, 2015, which happens to include Amazon.com, Zappos.com, Audible.com, and Diapers.com.
Meanwhile, the Discover it card is offering a promotion with similar terms. Through the end of 2015, they'll double the amount of cash back you earn for regular and category spending. Similar to the Chase Freedom, this card also offers a quarterly bonus category that normally doles out 5% cash back on the first $1,500 spent. For the final quarter of 2015, this extra earnings category includes Amazon.com, select department stores, and select clothing stores.
Since points earned through Chase and Discover can be redeemed for statement credits, you can also consider this an automatic 10% off. Simply charge all of your holiday shopping to your card (up to $1,500), wait until your statement closes, then redeem your points for money directly off your balance.
And these aren't the only cards good for holiday shopping. If you'd rather shop in the store than online, there are a slew of popular rewards cards to choose from that offer anywhere from 1% to 5% cash back on all of your holiday purchases. If you need to shop for a new rewards credit card, consider one of these options.
How to Use Cash Back to Save On Holiday Shopping
Using a cash back card for Christmas shopping is an excellent strategy if you want to earn free money or save a certain percentage on your order. However, this plan isn't fool-proof by any means. In order to actually save money on your holiday shopping with this method, you'll need to avoid paying interest on your purchases. Here are some tips that can help:
- Don't let your shopping get out of hand. If you want to maximize your savings with any of these offers, you need to make sure you're not overspending to earn rewards. Make a list of what you need to buy, estimate your total cost, and don't spend a penny more.
- Only buy what you have the cash to pay for right away. When you're shopping with rewards in mind, you need to avoid paying credit card interest altogether. To achieve this goal, you need to have the money in the bank to pay cash for every dollar you spend. Remember, you don't want to treat your credit card as a line of credit; you want to treat it as a bill that's due right away.
- Pay your bill online or as soon as it arrives in the mail. Worried your balance with creep up over time? Before you get too comfortable carrying a balance, mail in your full cash payment immediately. If you're monitoring your account online, you can even do it online with a direct bank transfer. Most credit cards allow you to do this for free.
Putting Christmas on credit makes a whole lot of sense if you have the money to pay for everything you need to buy anyway. The first step you need to take is finding the right rewards card. After that, you'll want to use it for all of your purchases in a way that maximizes its benefit. To avoid late fees, over-the-limit fees and credit card interest, you'll then need to pay your bill off right away.
With the right strategy and some self-discipline, you can earn up to 10% off your holday gift list – or simply build a stash of cash back you can use next year. And with the holidays always right around the corner, the more savings we can find, the better off all of us will be.
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