Earn big this holiday season with a rewards credit card
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Plan to spend a lot on holiday gifts this year? You’re certainly not alone. A recent survey from Bankrate showed that half of holiday shoppers planned to start checking off their list by Halloween this year. Further, the National Retail Federation (NRF) estimates that holiday retail sales totals during November and December 2022 will increase between 6 percent and 8 percent over figures from 2021, adding up to a total of $942.6 billion and $960.4 billion in holiday shopping and gifts.
Whether your share of that spending is on Black Friday bargains or the rest of the holiday season, it’s important to realize that you could get a little something back if you pay with a rewards credit card instead of debit or cash. That’s because rewards credit cards give you 1 to 3 percent in rewards on average for each dollar you spend, which you can pocket and keep for “free” if you pay your balance in full each month and never pay interest on your purchases.
Before you rush out to check off your holiday shopping list this year, it can make sense to pick up a new rewards credit card first. But, which card should you get? That depends on the type of rewards you want to earn and other cardholder perks you may be looking for.
The best credit cards for holiday shopping this year will leave you with rewards to spend long after the holiday season is over. Here are some of the most popular cards and offers for this year’s holiday shopping season and beyond.
Chase Freedom Flex
The Chase Freedom Flex℠ starts you off with a $200 cash bonus when you sign up and spend $500 within three months of account opening, but that’s not all. You’ll also rack up 5 percent back on up to $1,500 spent in categories that rotate each quarter (then 1 percent) and 1 percent back on all other purchases. In the meantime, you’ll earn 5 percent back on travel booked through Chase plus 3 percent back on dining and drugstore purchases – and all with no annual fee.
For a limited time, you can also earn 5 percent back on up to $12,000 spent at grocery stores the first year with this card, after which you’ll earn the standard 1 percent back.
The Freedom Flex is especially useful for holiday shopping due to its shopping benefits, including purchase protection against damage or theft and extended warranty coverage. You also qualify for an introductory interest-free period on purchases and balance transfers for 15 months (followed by a variable APR of 17.99 to 26.74 percent), meaning you can use your card as an interest-free holiday loan provided you pay your balances off in that timeframe.
Discover it Cash Back
The Discover it® Cash Back also offers 5 percent back on up to $1,500 spent each quarter in bonus rotating categories after activation (then 1 percent) along with 1 percent back on everything else you buy. Discover will also match all the rewards you earn after the first 12 months, and this card comes with no annual fee. The 5 percent cash back categories for the fourth quarter of 2022 are Amazon.com and eligible mobile wallet purchases.
You can redeem your rewards for statement credits, gift cards and merchandise. As an added bonus, this card gives you an introductory interest-free period on purchases for 15 months, followed by a variable APR of 14.99 to 25.99 percent. This card also comes with a free FICO score you can access on your credit card statement each month.
Blue Cash Preferred Card from American Express
If you’re hosting family for the holidays this year, you should check out the Blue Cash Preferred® Card from American Express. This card gives you 6 percent back on up to $6,000 spent in U.S. supermarkets each year (then 1 percent), along with 6 percent back on select U.S. streaming services. You’ll also get 3 percent back on transit including U.S. gas stations, rideshares, parking, tolls and more and 1 percent back on all other purchases.
You can earn $250 back when you spend $3,000 within three months of account opening.
You also qualify for an introductory interest-free period on purchases and balance transfers for 12 months, followed by a variable APR between 17.74 and 28.74 percent.
Also note that this card comes with return protection that can help you return eligible items when the store won’t take them back. Cardholders also get purchase protection against damage or theft, which is good for up to $1,000 per occurrence and up to $50,000 per calendar year.
This card does have a $95 annual fee after the first year, but its “little sibling,” the Blue Cash Everyday® Card from American Express, offers similar bonus categories for no annual fee.
Citi Double Cash Card
Also, check out the Citi® Double Cash Card if you don’t have it already. This card gives you 2 percent back on everything you buy – 1 percent when you make a purchase and another 1 percent when you pay it off. For a limited time, new customers can also earn a $200 cash bonus when they spend $1,500 on purchases within six months of account opening.
You can redeem your rewards for statement credits to reduce your holiday spending bill or pay for something else. This card also comes with no annual fee.
Kohl’s Credit Card
The Kohl’s Credit Card isn’t a typical rewards credit card, but it does help you qualify for frequent discounts of up to 30 percent off. Kohl’s also offers its own Yes2You Rewards program, which you can pair with these savings to lower your holiday spending bill. This program gives you 7.5% back in the form of Kohl’s Cash when you use your Kohl’s card.
The Kohl’s Credit Card doesn’t have a signup bonus, but you do get 35 percent off your first purchase when you sign up. This card also comes with no annual fee.
Amazon Prime Rewards Visa Signature Card
The Amazon Prime Rewards Visa Signature Card lets you earn optimal rewards on Amazon.com purchases without an annual fee or foreign transaction fees. Once you sign up, you’ll earn 5 percent back on Amazon.com and Whole Foods purchases, 2 percent back at restaurants, gas stations and drugstores, and 1 percent back on everything else.
You can redeem your rewards for anything you can buy on Amazon.com plus statement credits, travel, gift cards and a handful of other options. This card also comes with purchase protection, extended warranties on eligible items, auto rental collision damage waiver coverage and several other cardholder perks
Capital One Walmart Rewards Credit Card
The Capital One Walmart Rewards® Mastercard® could be huge for you if you do a lot of shopping at Walmart over the holidays. This card gives you 5 percent back in Walmart stores when you use Walmart Pay to cover your bill for the first 12 months (unlimited 2 percent back on in-store purchases thereafter). You’ll also get 5 percent back on Walmart.com purchases including grocery delivery, 2 percent back on restaurant and travel purchases and 1 percent back on everything else.
This card also comes with no annual fee, and you can redeem your rewards for statement credits, gift cards, travel and more.
How to optimize spending during the holidays
Using a cash-back or rewards credit card can help you rack up points on your holiday spending, but don’t forget how to maximize your earnings. Here are a few strategies to consider.
- Sign up for a new card to earn a big bonus. First, don’t forget that the holidays are the perfect time to sign up for a new card that offers a big sign-up bonus. Many cards let you earn 50,000 points or more when you sign up and spend a few thousand dollars in the first few months, and your holiday spending or holiday travel bill may be what you need to reach that threshold.
- Use credit card combinations to maximize bonus rewards. Also remember to maximize any credit card combinations you have, mostly by using cards for their respective bonus categories. If you have a few different rewards cards that offer bonus points in different categories like dining, groceries and department stores, for example, make sure you’re using the right card for bonus purchases so you rack up more rewards.
- Click through a shopping portal every time to buy something online. Finally, don’t forget to utilize shopping portals when you buy gifts online. Major card issuers like Chase have their own portals, but so do most of the major airlines. You can earn another 1 to 10 points or miles for each dollar you spend through a portal, and all you have to do is “click through” before you shop.
Pitfalls to avoid
Rewards can definitely be enticing, but don’t forget the golden rule of credit card rewards: To benefit from pursuing rewards, you have to pay your balance in full each month and never pay interest on your purchases.
Unfortunately, the convenience of credit cards can make avoiding debt a difficult feat. Here are some pitfalls to watch out for as you try rewards for the first time:
- Don’t overspend to earn more rewards. It’s easy to spend more when you know your rewards haul depends on it. Make sure you’re only using rewards credit cards for planned purchases and never spend more than you wanted just to rack up another 1 percent to 3 percent back.
- Avoid pursuing more than one signup bonus at once. Signup bonuses can be lucrative, but they can also create a trap. Make sure you can meet a minimum spending requirement with regular bills and expenses before you sign up for a new card. Avoid overextending yourself by trying to pursue several signup bonuses at once.
- Don’t apply for too many new cards. Finally, don’t apply for too many new credit cards at one time. Doing so might help you earn more points, but you could temporarily ding your credit score if you overdo it. Also, remember that more cards mean more details to keep track of, and you could easily wind up with too much of a good thing.