The holiday shopping season is officially under way, now that Black Friday is over. Hanukkah is right around the corner and Christmas is fast approaching. As you get into your holiday shopping, you know you're going to pull out the credit cards.
While some consumers turn their noses up at credit cards, the truth is that a good rewards credit card can be your best friend during the holiday shopping season. As long as you don't go overboard with your holiday shopping, and work to save money, the reality is that your credit card can be a valuable tool. Here are 3 tips to help you make the most of your holiday shopping with credit cards:
1. Snag that signing bonus
When you get a new rewards credit card, there is a good chance that you have a shot at a signing bonus. However, meeting the minimum spending requirement to qualify for the bonus can be a bit tricky. That's not the case during the holidays. Your extra holiday spending can go toward helping you obtain that bonus, which might be anything from a couple hundred dollars cash back to an extra tens of thousands of points that can be redeemed for travel. Being able to snag a signing bonus can make your holiday spending go a little bit further and offer you more bang for your buck.
2. Rack up the extra rewards points
Even if you aren't singing up for a new rewards credit card, you can still use your holiday shopping to benefit. Rack up the extra rewards points during the holidays. Your gifts cost less, on balance, when you are able to offset some of the expenses with cash back, or with travel rewards. Being able to earn points to use to airfare or hotel stays can reduce the sting of your extra holiday spending. Use your favourite rewards credit card now to work toward a great vacation later.
3. Keep within your planned holiday shopping budget
While I think that a rewards credit card can be a great financial tool, I don't advocate reckless spending. Before you decide to use your credit card for any type of shopping, you need to make sure that you have good money habits. This means that you need to have a spending plan or budget.
The need for a holiday shopping budget is essential before you start using a credit card to make your purchases. Look ahead to determine how much you can spend during the holidays. You should already have the money you will need saved up. Even though you are using credit cards to make your purchases, it doesn't excuse you from having the resources already.
None of these strategies for making the most of your credit card rewards works if you carry a balance for months and end up paying a high rate of interest on your balance. Save up the money ahead of time, work with a holiday shopping budget that you can afford, and then pay off your credit cards as soon as the bill comes in.
The best way to take advantage of a rewards credit card during the holidays is to complete all of your planned shopping with plastic to get the bonuses and points, and then pay it off before you pay even a dime of interest.
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