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Pay for holidays with credit card rewards

Credit Cards » Pay For Holidays With Credit Card Rewards

Cash-poor this holiday season? Maybe it's time to dust off those credit card rewards points. They're great for this time of year and can bail out your bank account with big discounts on just about everything you buy.

Almost half of all rewards cardholders considered buying holiday gifts with points last year, according to a quarterly Capital One rewards survey from 2012. About 3 in 5 planned to redeem for gift cards, while almost 1 in 5 said they would buy merchandise. The survey polled 1,045 rewards credit card holders from different issuers.

Your points will go far if you use them wisely.

"You want to have a plan and budget," says Amy Lenander, Capital One's vice president of the rewards programs. "Once you know what you want to get for each person on your list, you can look at your rewards program and see what you can check off."

Here are eight ways to get more from your rewards this holiday season.

1. Merchandise: Skip the mall and shop through your credit card's website. Most issuers offer portals to online shopping malls where you can buy merchandise with rewards points. For example, Capital One cardholders can buy electronics, apparel, accessories, toys, health and beauty products, pet products and more. If you don't have enough rewards, you may still want to shop through the portal since you can earn bonus points for doing so.

2. Gift cards: Despite the impersonal nature of gift cards, they have ranked as the No. 1 requested present for the past seven years, according to the National Retail Federation.

And guess what: Many credit card rewards programs can buy these perfect stocking stuffers. This holiday season, Bank of America is offering gift cards from major retailers and giving rewards members deals on them. For instance, most restaurant gift cards from Restaurants.com will cost members $10 for a $25 gift certificate.

Discover also provides discounts on gift cards from its partner retailers through its Cashback Bonus program.

3. Amazon: If you'd prefer to sit on your couch and shop from your computer this winter, let your rewards points do the typing. Discover, American Express and Chase cardholders can use rewards points to pay for their purchases at Amazon.com.

4. Experiences: Buying for someone who already has enough toys? Why not use your rewards points to buy an experience he or she won't forget? For instance, Chase cardholders can use points for VIP movie premiere access or a private golf lesson with a pro.

5. Charity: Don't underestimate the gift of giving back. Most issuers allow cardholders to donate their rewards points to a host of charities. Capital One's Giving Site, for example, will let you donate your points to a nonprofit organization, and it'll chip in by covering the transaction cost. Donations of points most often are tax deductible, too.

6. Travel: Sometimes the best gift is family. With rewards points, you can help pay for your loved ones to visit during the holidays. Even if you don't have enough rewards to purchase a flight, it still makes sense to buy flights through your credit card issuer. Many cards will pay you bonus points for doing so. For example, Bank of America cardholders get three points for every dollar spent when they book travel plans through Bank of America's website until the end of the year.

7. Unexpected rewards: Don't think you have any rewards to use this year? Think again. You may have a rewards program you didn't know about. That's what happened to John Ulzheimer last year. The president of consumer education at SmartCredit.com checked his credit and debit card websites one afternoon and discovered that his credit union debit card had accrued 30,000 unused rewards points. He cashed in those points for $300 in iTunes and Fandango gift cards.

You may also want to check what your frequent flier program can buy. "I would bet $50 that half of the Delta SkyMiles members (from American Express) don't know they can use their miles for more than just getting flights," Ulzheimer says. Miles can be traded in for gift cards and merchandise.

8. Gifts that give back: You don't have to be a Grinch to keep rewards for yourself. If you use your credit card to shop at the right stores this holiday season, you'll get a bigger rewards bonus than usual.

For example, Discover cardholders can earn 5 percent cash back on up to $1,500 in online purchases from October to the end of December. That's $75 back in your pocket.

Similarly, Chase Freedom cardholders earn 5 percent cash back on up to $1,500 spent at Amazon.com and select department stores through the end of the year. Cardholders can also earn 5 percent cash back on an Amazon Prime membership.

Last, Capital One allows you to retroactively apply rewards to travel expenses up to 90 days after the purchase. That means if you're short on rewards for a flight to Nana's, buy it without them. Then apply rewards you earn from your holiday shopping toward the purchased ticket afterward. Consider it a belated Christmas gift.

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