Maximize Holiday Shopping with Rewards Credit Cards

We always think of money during this time of year. The holidays always seem to carry with them the expectation of spending money. We spend money on gifts, special foods, entertaining and home decor. Creating a holiday budget can help us keep our spending to a manageable level. No matter how you budget, though, the truth is that you're going to spend money during the holidays. So, while you are spending, you might as well plan to get something back.

Using Rewards Credit Cards as You Shop

One of the best ways to maximize your holiday shopping is to make use of a rewards credit card. These credit cards provide you with various perks for making purchases you would be making anyway. Instead of merely using a debit card, you could be earning points with a rewards credit card. These points could then be redeemed for travel, merchandise, or even cash.

Before you buy gifts or make plans for a holiday party, stop and think about what you are using to pay for your purchases. If you have a cash back card, you could quickly get a little extra if you put your expenses on the card. Additionally, if you order your gifts online using the special shopping network associated with your rewards credit card, you could find that you earn points faster. Some credit cards even run special promotions this time of year, helping you earn perks at a faster rate. Consider your holiday spending plan, and think about how credit card rewards can fit into that.

Responsible Spending

Just because you are earning reward points, though, doesn't mean that you should go crazy and spend money that you don't have. Indeed, you should be careful about your holiday credit card spending. Create a budget, and then stick to it. Keep track of what you are buying with your credit cards, so that you don't go beyond your holiday budget. Credit cards come with perks debit cards don't have, but you still need to be careful.

The real key to maximizing your holiday shopping is to make sure that you don't end up carrying balances into the new year. Pay off your credit card balance at the end of the billing cycle with the money that you had planned for holiday spending. If you carry a credit card balance into the new year, even having the best credit card reward program won't prevent you from negating the value of the rewards, since the interest that you pay on your debt will be so high.

Bottom Line

Planning your holiday spending is always a good idea. Credit cards can offer a number of perks that can provide advantages during the holiday spending season. There are those who demonize credit card use, but if you are careful, and use reward credit cards as part of your overall spending plan, there is no reason why your holiday spending can't provide you with perks that will take you into the new year.

Image source: W. via Wikimedia Commons

This post was included in the November 14, 2010 Canadian Finance Carnival and in the November 19, 2010 Best of Credit Cards & Saving Money Carnival at CardWisdom.com.