From gifts to travel to dining, Black Friday and the holiday season often mean extra expenses. Here are four smart strategies that will save you money, bring you rewards and get you cash.
If you aren’t using a credit card for all your purchases, maybe you should be - credit card issuers offer competitive incentives. Just make sure you use them responsibly, paying your full balance whenever you can, and always on time.
If you are using a credit card, you might be able to upgrade in time for the holidays. Do you want a Cash Back or Rewards Points program? What retail, airline and hotel partners does your card have? Can you get a lower interest rate? Does your card offer purchase, price, return or warranty protections? It pays to compare, and Forbes and The Points Guy are good places to start.
On Black Friday and throughout the holiday season, issuers typically offer welcome bonuses such as a temporary 0% APR or significant rewards points. If a new card makes sense, and you can use it responsibly, this might be the right time to open a new account.
However, many welcome benefits are often activated only after you’ve charged a fairly high amount. Put enough holiday purchases on your new card, and you may pass that threshold and collect some serious perks.
Credit cards with rewards programs give you reward points for your purchases, which can later be redeemed for purchases. The issuer often decides where the points can be redeemed and at what cash value. This can change without notice, so if you see a good deal, use your points before they are devalued.
Reward points are very easy to use with airlines and hotels - perfect for holiday travel! Points are redeemable for airline miles or hotel credit at varying rates, and some cards have preferential rates with specific airlines or hotel chains. Always check the value of your points before you use them. Sometimes it saves money to pay cash.
Points can also be redeemed at selected retailers. Amazon is partnered with most rewards programs, for example. Card companies rotate their retail partners throughout the year, so check with your credit card to learn where you can redeem your points.
Pay attention to the details of your card’s rewards-earning program too. Some cards will offer a multiplier when you buy from particular companies or purchase in specific categories, allowing you to earn points at up to 10x the usual rate.
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Cards with a cash back program are great for people who want rewards without the hassle of points. Spend money, get money back, use it wherever you want.
Details vary between cards, but cash back programs typically have a lower percentage rate for general purchases and a higher rate for select retailers (such as Walmart or Amazon) or specific categories (like gas or groceries). Often the rates will have spending limits (for instance “5% cash back on the first $1,500, then 1%”), but every dollar spent will earn you some money back.
Cash back cards regularly change the retailers associated with the higher rewards rate, often on a quarterly basis. Once you identify your card’s retail partners, you can focus your holiday spend on those stores in order to capture the greatest cash back return.
Beyond rewards points and cash back, most credit cards provide deals for a wide variety of retailers. Member discount programs such as Amex Offers and BankAmeriDeals list discounts and rewards for everything from coffee to sneakers to TVs. All offers are bound by limitations such as minimum purchase and expiration date, but new deals are added regularly.
Shopping portals are a newer type of member discount program built exclusively for e-commerce. Starting from a portal webpage (such as Citi Bonus), cardholders click the retailer they want to buy from and are delivered to that company’s web page, where they complete the transaction normally. That purchase then delivers points or cash back in addition to the card’s existing rewards program.
Diligent shoppers can boost their savings even more by using outside cash back programs in combination with credit card reward programs. Aggregators like Cashback Monitor and Cashbackholic list the deals various shopping portals offer for a particular brand. Choose the one that’s best for you, then pay with your favorite rewards program card.
Regardless of how you’re using your card this season, Bright can keep you on track -- and pay off your cards faster.
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With a postgraduate degree in commerce from The University of Sydney, Pranay has his finger on the pulse of the finance industry. Breaking down complex financial concepts is his forte.