Traditionalists may debate the merits of putting up Christmas decorations well before Thanksgiving, as many retailers do these days. But the November displays are actually a good cue to start preparing your finances for holiday shopping. This includes considering your credit card options to earn the most possible rewards from your credit cards, and get the best benefits from your holiday purchases.
Here are six things that you can do to get ready.
1. Sign up for a cash back card
Unless you’re already heavily invested in a specific travel rewards program, you’ll probably be better off using a cash back rewards card. Some of the best cards for holiday shopping offer as much as 5 percent back at select department stores and retailers such as Walmart, Amazon, and Target. In addition to cash rewards on your purchases, many credit cards offer a bonus offer to their new cardholders, which can net you a few hundred dollars just for meeting their spending requirement, which is easiest to do this time of year.
Another option is to choose a card that offers you as much as 2 percent cash back on all of your purchases. With these flat-rate rewards cards you avoid having to keep up with category bonuses. However, you should only use reward credit cards if you can avoid interest charges by paying your monthly statement balances in full. Otherwise, it’s better to find a card with the lowest interest rate.
2. Be sure to activate your bonus purchase opportunities
If you do choose to go with a card that features rotating bonus categories, check the terms. You may need to log in and activate the bonus categories each quarter. Thankfully, even if you activate after the quarter begins, you should receive your bonus points for the qualifying purchases you’ve already made during the quarter. Keep in mind that these bonus categories often come with limits on how much you can earn. Keep track of your purchases and switch cards once you’ve reached the limit. (See also: Best Credit Cards With Rotating Reward Categories)
3. Learn about shopping portals
Many credit cards and loyalty programs offer online shopping portals that allow you to earn extra points, miles, or cash back from your purchases. They usually feature top national retailers, and can usually pad your purchase rewards by one or two points per dollar spent, but occasionally you’ll find deals for as much as 30 points per dollar spent. Also, most airline and hotel loyalty programs have their own rewards portals. When you use these websites, you can also earn rewards with your credit card, in effect stacking your rewards earning potential. (See also: 11 Ways Your Credit Card Will Save You Money While Holiday Shopping)
4. Examine your cardholder benefits
One of the best things about using your credit card for holiday shopping is the cardholder benefits that can apply to your purchases. For example, many credit cards include accidental damage and theft protection, as well as an extended warranty policy. Other shopping benefits may include price protection and return protection. Once you know which cards offer the best benefits, you may use that as a factor in determining which new card to apply for, or which card to pull from your wallet for a particular purchase. (See also: 5 Reasons to Use Your Credit Card for Holiday Purchases)
5. Decide if it’s worth getting a store credit card
One thing is for sure, many of the stores you visit will offer you an application for their co-branded credit card. But rather than trying to make a quick decision at the cash register, find out in advance if it’s worth considering.
Many retail credit cards have a high interest rate. Look at the terms and conditions for the cards from your favorite retailers, and the quality of the rewards program offered. Then you can decide if it’s worth getting the store card, or if you should simply decline the offer and complete your purchase. (See also: Should You Sign Up for That Store Credit Card?)
6. Consider an interest-free promotional financing offer
If you are unsure whether you’ll be able to pay off all of your credit card balances during the holidays, think about opening a card with a 0 percent APR offer for new purchases. These offers allow you to avoid interest charges on your purchases for at least six months, and often 15 months or longer.
Balance transfer cards can also help you out after you’ve rung up more than you can immediately pay off, but it’s better to use an interest-free financing offer on new purchases now. That’s because nearly all 0 percent balance transfer offers have a 3–5 percent fee. (See also: Best Credit Cards to Wipe Out Holiday Debt)