Maximizing Credit Card Rewards and Other Tips to Save Money at Christmas

Maximizing Credit Card Rewards and Other Tips to Save Money at Christmas

By Aaron Crowe

Christmas is a time to splurge on gifts for friends and family. For parents, it can be fun to buy a load of toys for their kids and see their happy faces on Christmas morning.

Parents spend an average of $422 on a child ages 8-14 at Christmas, and 34 percent of parents spend $500 or more on their child, according to the 2016 “Parents, Kids & Money Survey.”

Gifts and other holiday costs — such as dining out and going out more to events — can make December an expensive month. The National Retail Federation found in a survey that Americans plan to spend an average of $935 during the holiday shopping season this year.

Much of that spending can end up as debt on credit cards. A 2015 survey by MagnifyMoney found that the average family added $986 in holiday debt, with 52 percent of debt holders using credit cards to finance it.

Starting a new year off with almost $1,000 in extra debt doesn’t sound like an insurmountable problem, but it can snowball. On a credit card charging 15 percent interest, making the minimum $25 monthly payment would take 10 years to pay off and would cost nearly $400 in interest.

If you are going to use a credit card at Christmas, there are some ways to use it wisely and to maximize your credit card rewards so that you’re saving some money.

Categorize purchases on credit cards

The main way is to map out your spending to maximize rewards, suggests Julie Pukas, head of US Bankcard and Merchant Solutions at TD Bank.

For example, some credit cards may give you more points for grocery shopping, so make sure to do all of your holiday grocery shopping with that card. Another card may give you six time the points at a certain gas station.

Some credit cards let you pick a rotating spending category each quarter that offers more rewards points. If your card has this option, set it up to meet your holiday spending patterns.

Learn the details of your credit card rewards. Know if miles expire and if there are caps on reward points.

Transfer points to gift cards

Your credit card rewards program can’t only be used to buy yourself gifts. Some allow rewards points to be transferred to gift cards, which you can use as gifts or to buy presents with at retailers.

Before making such a transfer, do the math and make sure that the gift card is at least equal to the amount of cash or other rewards you’d receive in the program. Some rewards programs will give you a discount for a gift card exchange, such as using $20 in cash back points for a $25 gift card.

Use their shopping portal

Some credit cards have online shopping portals for cardholders to use rewards points and earn extra points for shopping in them. Shopping at a credit card issuer’s website portal to get to Macys, Home Depot, Best Buy and other stores can lead to up to 20 extra points for each dollar spent.

You can still find sales through the shopping portals, and can use online coupons to save more.

Set a budget

Christmas will be here before you know it. But it’s never too late to set a budget for holiday spending.

Couples spend an average of $148 on each other on holiday gifts, according to the TD Bank “Love & Money Survey.” If that’s how much you plan to spend on your spouse, then stick to it. If you can’t afford that much, then agree ahead of time on a figure that fits in your household budget.

Plan to pay it off

Even if you go beyond your holiday spending budget, plan to pay off your credit card bill in full when it arrives in January. Make it a priority after Christmas, and at least pay more than the minimum due at each billing cycle.

If you get a holiday bonus, use it to pay off your credit card in January.

Monitor your credit

One way to stick to your budget is to set up alerts on your credit card to send you a text message or email when your credit card balance reaches a certain dollar amount.

Transaction alerts can also help you spot fraud, notifying you when your card is charged over a certain amount.

Use rewards points to pay credit card bill

Some rewards credit cards allow cash back points to be used as a statement credit. Turn some of your Christmas shopping into a way to pay your credit card bill, benefiting your budget and the people you’re buying gifts for.