The holiday season is upon us. If you’re like me, you have already received a number of emails or flyers promoting Black Friday sales. When you see a nice laptop computer for less than $300 or 36-inch HDTV for around $250, it’s hard not to reach into your pocket, pull out a credit card and go for it. And there’s nothing wrong with this. Most Americans use credit cards for their holiday shopping as this allows them to spend more on gifts then if they had to pay cash.
Financing your Christmas shopping
Now would be a good time to sit down and create a strategy for how your finance your holiday gift purchases. The rewards type credit cards usually offer special promotions and deals that can help you expand your budget and cut or eliminate your interest payments. Of the credit cards typically available, here are four that might be your best choices for holiday shopping.
If you’re old enough to remember this, the Discover Card basically invented the cash back card. It is an especially good choice for holiday purchases as it has a 5% rebate on the initial $1,500 you spend in department stores, and purchases you make online until the end of 2012. If your idea of fun isn’t to charge through store aisles at 5:00 AM, Discover will even pay for shipping the next day on certain items on Amazon.com. Plus, if you choose gifts from the merchants listed on ShopDiscover.com, you can get bonus rebates of up to 15%.
From now until December 31, people who have Chase Freedom cards can get up to 5% cash back on purchases that qualify at hotels, airlines, Best Buy and Kohl’s. There is also an independent promotion with Kohl’s that allows Chase cardholders to get 10% of their purchases back as credits when they shop in the Ultimate Rewards website. You can even stack both of these rebates to get 15% cash back on the initial $1,500 you spend in its retail locations.
Wells Fargo Cash Back Visa
The best rewards cards have typically come from retail banks. The good news for consumers is that competition has heated up to the point where some of the big banks are launching unusually good holiday promotions. As an example of this, the recently introduced Wells Fargo Cash Back Visa will get you a 0% APR and a 3% rebate on all grocery, drug store and gas purchases for six months. Your other purchases will earn 1% cash back after the promotional period ends.
Capital One Cash
While there has not yet been an announcement from Capital One about sign-up bonuses or extra rebates for the Christmas season, it has increased its offerings via its shopping portal called Perk Central. This website is unlike those of most credit card companies as it now includes an assortment of in-store bonuses. A number of the best deals for this season include rebates of cash back up to 10% at retailers such as Foot Locker and Banana Republic.
A word of warning
Before you rush out to sign up for one of these cards, it’s important to understand that they all come with APR’s that are a bit steeper than those cards who do not offer the same frills. However, if you can pay off your balance every month, this will keep your savings and rewards from being consumed by interest charges. If you can budget wisely and spend what you can afford, your instant discounts and cash rebates should total more than your annual fees. But do make sure that you review each card’s list of promotional partners as a card that comes with a lower overall rebate might have a better discount at one of the stores you like best.