Strategic Use of 'Plastics' Can Save You Hundreds This Holiday Season

11/20/2011 01:15 pm ET | Updated Jan 20, 2012

Watching movies like A Christmas Story or It's a Wonderful Life has become a holiday tradition for many families. If you're familiar with the latter, you know that getting in on the "ground floor" of the "plastics" industry is one of the many things on which George Bailey (Jimmy Stewart) missed out in making sure the family business stayed afloat throughout tough times. Oddly enough, this particular aspect of the classic Christmas movie is applicable to this year's holiday shopping season. You see, many of us are searching for ways to save in an uncertain economic environment, and strategically using plastics (i.e. credit cards and gift cards) could be part of the answer.

More specifically, opening the right credit card could be worth up to $500, and in light of the fact that the average U.S. household has $300 in unused gift cards, unlocking their value could prove pretty darn lucrative, as well. The question of the hour is, therefore: How does one go about realizing the monetary potential of plastic this holiday season?

Credit Cards

Starting with credit cards, the first thing you need to know is that the Great Recession has actually resulted in particularly attractive offers for people with above-average credit. Credit card companies are competing so fiercely for the most stable consumers that they're offering better and better initial rewards bonuses as well as longer and longer 0 percent introductory interest rates. By opening the right card, you could therefore score some extra cash to pay for presents, give yourself extra time to pay for upcoming purchases before interest becomes a factor, or lower the cost of debt remaining from last year. Even if you don't want to open a credit card with just the holidays in mind, offers are available that can provide year-round benefit.

With that being said, after comparing over 1,000 credit card offers, the following cards were chosen as the best for holiday shopping:

  • Chase Sapphire Preferred (Best Initial Bonus): The 50,000 bonus points this card provides after you spend $3,000 during the first three months are redeemable for a $500 check or statement credit. There is no annual fee during the first year.
  • Capital One Venture Rewards Credit Card (Best Overall Rewards): The mixture of a good initial bonus ($100) and lucrative rewards across all purchases (2 miles/$1 spent) makes the Venture Card a good option for the holiday season and beyond, especially since miles can be redeemed for any travel-related expenses.
  • Citi Dividend World MasterCard (Best 0 percent Purchase APR): Hearing that this card offers 0 percent on new purchases for 15 months should be music to the ears of the 29 percent of consumers who, according to an American Express survey, are planning to revolve balances on their credit cards in order to finance holiday gift giving this year. Add to the equation a $100 initial bonus and 5 percent cash back on purchases made at department stores, toy stores, electronics retailers, and clothing stores through the end of the year and that music starts sounding even sweeter.
  • Citi Platinum Select MasterCard (Best Balance Transfer): While this card does have a 3 percent balance transfer fee, the fact that it offers 0 percent on transfers for 21 months makes it a valuable tool for fighting existing debt.

Gift Cards

Twenty-five percent of the consumers who participated in a recent Consumer Reports Holiday Poll reported having at least one unused gift card left over from last year. If you are in such a situation, you can forget sunk costs because there are a number of ways to make use of these holiday leftovers:

  • Re-gift: Most stores will allow you to buy new gift cards with old ones, so even if your card has accumulated some scratches during the year, the person you give it to never has to know.
  • Turn Back the Clock on Expired Gift Cards: Many states have unclaimed property programs, through which you can recoup funds from expired gift cards.

Final Thoughts

Like George Bailey, you might decide that plastics aren't for you, and that's fine. You simply don't want to have regrets like George, so it's important to understand exactly how credit cards and gift cards can make the holidays more affordable. After all, the average consumer will spend $831 on gifts this year, according to Amex, and we could all use as many money-saving ideas as possible.

Odysseas Papadimitriou is the founder and CEO of Card Hub, a leading credit card and gift card marketplace.