A lot of people these days blame credit cards for the national debt crisis, but really credit cards can be used to save a whole lot of money, especially during extreme shopping situations, like the holidays. If you use a credit card properly, it can even help you make a little extra holiday cash through rewards and perks. If you continue to rack up debt and pay high interest rates on your balances, then of course you will fall into debt -- but if you follow these few rules when using your credit cards, you can save a bundle of money this holiday season instead of getting farther into debt:
Follow The Rules And Earn The Most Cash Back Rewards
Many rewards credit cards offer the best cash back rewards within certain categories, and these categories are often geared toward holiday shopping from October until the end of December. These cards often offer a base cash back rate, usually 1 point per $1 spent, and then offer upwards of 5 points per $1 spent on things like shopping on Amazon or at major department stores. To get the most out of your rewards, it is smart to ONLY use these cards on things that will give you the most points.
For example, if your credit card offers you 5 points for every $1 spent on Amazon, you should only use that card on Amazon. If you want get the most out of these rewards, make sure you know which categories you can earn the most points on and use your credit cards accordingly. Here is a quick list of some credit cards with holiday shopping-related rewards.
Look For The Best Introductory Bonuses And Perks
Credit cards are competing for your attention these days, so many are offering some outstanding bonuses and perks to draw you in. This is perfect for the money-minded consumer who is looking to make a little money off their credit card company for the holidays. Say the credit card is offering you 40,000 bonus points when you spend a certain amount of money within the first 3 months. If you use the card on things you were going to spend money on anyway, like presents for your family, then you can pay it off immediately and reap the rewards of essentially $400 extra that you wouldn't have had before the credit card. This also works with gift card perks and huge cash back percentages.
Use A Credit Card With A 0% Intro APR
You are spending so much on holiday shopping as it is, you definitely don't want to add interest to that total. The best way to avoid paying extra interest on your credit card debt is to find a card with a special 0% intro APR. Many rewards credit cards now offer an introductory APR of 0%, so you won't be paying interest anywhere from 6 months to a year and a half. This will help you make direct payments on your credit card balance and keep you from adding to your debt with extra interest. Just make sure you pay off the balance before the next holiday season, or your debt could get too out of control to maintain. Here are a couple credit cards that have a 0% intro APR in addition to great rewards.
Annual Fees: Friend Or Foe?
Whether you opt for a card with an annual fee or not will depend on what you are looking for. On the one hand, most credit cards with annual fees have amazing perks, which can be a huge bonus if you use them properly. If you don't, the annual fee can often outweigh those perks in the long run. It's smart to do a cost analysis to make sure the fees don't outweigh the bonuses.
For example, if you are paying $79 a year in annual fees, and the intro bonus is only 20,000 points, you will eat through that bonus in 3 years by paying the annual fees. That being said, if you are utilizing other perks like cash back or travel miles, the annual fee may be worth it. You could also just cancel the card after you get the bonus and before the annual fee kicks in, but canceling a credit card can hurt your credit score.
Holiday shopping can be daunting and can leave you feeling like you have a gigantic whole in your wallet, but if you learn to game your credit cards a little, you can end up minimizing the damage of holiday shopping.