As CreditDad.com readers know, I’m a big fan of using credit responsibly. This can include using credit cards for your holiday shopping. In fact, you can use your cards to save a bundle and get more for your money.
Friends and family will love the great gifts (or gift cards) you picked out, and you won’t have to spend until next Halloween paying off holiday debt.
Here’s my blueprint for leveraging your credit cards for holiday shopping to save money.
1. Pay Attention To Finance Charges And Due Dates
The best intentions of using credit cards to garner rewards and save money during holiday shopping can go horribly wrong with one late payment. If you’re not used to using your credit cards year round but are giving them a workout this holiday, set automatic reminders via email and mark due dates, plus a few days before if you pay your bills via regular mail, on your cell phone calendar or anywhere else that you’re sure to notice them.
Additionally, some creditors waive finance charges if you pay the amount in full within a certain amount of time. If you have a Kohl’s charge, you don’t have to pay interest as long as you pay 50 percent of the balance on the due date. Knowing all these rules can help you avoid finance charges, because paying interest can send your holiday savings right up the chimney.
2. Don’t Charge More Than You Can Pay
It Goes Without Saying, but we’ll say it anyway — Don’t charge your card more than you can pay off by the due dates. Being smart about finance means not counting your chickens (or maybe we should say partridges to keep with the holiday theme?) before they hatch. If you typically get a Christmas bonus, wait until you receive it to spend it, even if that means a Christmas Eve trip to the mall.
3. Shop Smart With Your Credit Card
Shop strategically to maximize your bonus points with top rewards credit cards like Discover More and Chase Freedom. Shopping strategically means knowing the dollar limits to earn maximum bonuses and knowing how you can earn those points. One handy trick I learned is putting sticky notes on your credit cards listing the bonus categories for the quarter.
4. Shop Online To Earn Even More Bonus
While Discover More might seem like the no-brainer choice for online shopping, it pays to browse through the Chase Freedom Earn More portal before you whip out your credit card. Some online retailers offer as much as 10X cash back or more when you shop online with your Chase Freedom card. The Shop Discover portal offers similar bonuses, so you want to check both sites.
But don’t be a slave to bonuses, either. If you’re paying more at one website than the bonus points you’ll earn are worth, go for the lower price and use Discover to earn that additional 5 percent.
5. Cash In Bonus Rewards For Gifts Everyone Loves To Get
You can cash in bonus points for gift cards and get a $25 gift card for the equivalent of $20 or, more commonly, $22.50. If you’ve accrued a lot of points over the years, the savings can add up. Even if you’re paying 2,500 points for a $25 gift card, it’s still a great way to use your bonus points. Just be sure to allow about two weeks for delivery before the holiday.
6. Avoid Impulse Shopping For “Right Now” Offers
Avoid impulse store credit card offers where you can save 10 percent or more on that day’s purchase. It’s tempting to sign up for a store credit card and earn immediate savings on your holiday purchases. But getting a new credit card can cause a temporary dip in your credit score. If you’re planning to buy a house, get a new car, move to a new apartment or even shop for car insurance in the next six months, steer clear of store credit cards.
If you already have a store card, use it wisely. Some stores will let you earn discounts even if you only put half the purchase on your store credit card. Find out if you start accruing finance charges from the date of purchase or if there’s a grace period. And find out the interest rate, which is usually exceptionally high, so you don’t make an impulse decision to put something on a store credit card and come to regret it when you receive the bill.
It is a good idea, if you already have a store credit card, to use it periodically. Otherwise, the creditor may cancel the card and that’s bad for your credit rating, too. One solution is to carry cash, use the credit card, and pay it off immediately at the register.
With wise credit card spending, you can have a happy holiday and rest easy when the bills arrive in January, too.