Cracking the rewards code: Insider tips for earning points during end-of-year holiday shopping

The 2023 holiday season is shaping up to be a busy one, with consumers continuing to make up for time lost during the pandemic. More than half of travelers (57 percent) plan on using their credit cards to pay for at least some of their travel expenses, with 36 percent expecting to pay off this debt and not carry a balance, according to a Bankrate survey on holiday travel.

Yet despite high travel costs, only 21 percent of the travelers surveyed expect to use their credit card rewards to offset the cost of their trips. If you aren’t cashing in your card rewards to take off, you might be missing out on one of the easiest ways to travel for less. The points and miles generated by travel credit cards can be applied toward airfare and hotel stays, potentially saving you hundreds of dollars in the process.

Booking your travel with a credit card is one way to earn credit card rewards during the holiday season. But with the busy holiday shopping season ahead, you can also seize the opportunity to cash in on your other holiday purchases.

Rewards credit cards and holiday spending

Use a credit card for travel shopping

One smart way to use your rewards credit cards this season is on supplementary purchases for your holiday travel plans.

Bankrate’s holiday travel survey finds that about half of U.S adults aim to go on an overnight trip this holiday season, with 33 percent planning on traveling by car. Interestingly, 45 percent of these road trip planners are parents with children under the age of 18.

If you intend to take a road trip with children in tow, you likely have a list of items you plan to purchase to make traveling with kids more comfortable (or, at least, less trying). With Black Friday coming up, you could take advantage of the buying opportunity to stock up for your travel while also earning credit card rewards.

Here are a variety of other ways you can use your credit card for travel-related shopping while also gaining rewards:

• If your credit card offers bonus rewards categories, try to max out your rewards limit in those categories. For one, snacks are always welcome on a road trip, so if you have a card that rewards spending on groceries, make sure you use it while stocking up.
• Luggage is always a necessity when you travel, and good quality, durable luggage will typically be more expensive. Black Friday sales could offer some deals, and you can maximize their impact by buying them on a flat-rate cash back card.
• Add items to your list that will make your trip more comfortable, such as sturdy shoes and water bottles. Seasonal clothing such as winter jackets and ski pants could also be useful, and again, you can match your purchases to your cards’ rewards structures to earn the most rewards possible.

You can also take advantage of this holiday shopping to complete the minimum spend requirement on a new rewards card.

According to Ted Rossman, Bankrate’s senior industry analyst, “The holidays are actually a great time to sign up for a new credit card, since you typically need to spend anywhere from a few hundred to a few thousand dollars within your first few months with the card to earn the sign-up bonus. Most people spend more than usual around the holidays, so you could turn this spending you would have done anyway into a free future trip or put some cash back into your wallet.”

The caveat is that you should always plan to pay off your card balances in full by their due date so that you don’t pay interest on your purchases. Otherwise, with the average credit card interest rate at 20.72 percent, interest charges will eat away at your rewards.

Using a credit card for holiday shopping

This holiday season, your preferred items are more likely to be available since the supply chain issues created by the pandemic have largely been sorted out. But while inflation has slowed down from last year, it is still a factor. This may be why a Bankrate survey on early holiday shopping found that 25 percent of shoppers feel stressed out about costs this year.

If your budget has been impacted as a result of higher prices, you can be a savvy shopper and stretch your money further with rewards credit cards. Shopping with rewards cards offers you a chance to save by gaining rewards. Before you start using your cards, however, take a look at their rewards rates so that you can map your spending to the card that will offer the most rewards for that spending.

And while Black Friday is the traditional day for deal shopping, it’s also a good idea to look out for some pre-Black Friday deals. These early-season deals are becoming increasingly common and may allow you to beat the Black Friday rush while garnering good deals.

Here are some typical holiday shopping items that could earn you rewards by using your credit card:

• If you’ll be hosting a party, stock up on groceries with a grocery rewards card.
• If you’re buying children’s toys and other gifts, use a card that offers flat rate cash back or special incentives for the retailers where you plan to buy.
• Black Friday is typically a good buying opportunity for home electronics. These costlier items could help you garner bigger rewards, though you may also find earlier deals on electronic items.
• If you’ll be buying new items to decorate your home for the holiday season, look for merchant special offers available in your card issuers’ portals.
• If you have a practice of sending out traditional holiday cards, that’s another purchase you can load on your credit card.

Interestingly, a Bankrate study found that Detroit, Boston, Philadelphia and Charlotte ranked as the top cities for holiday shopping. That’s largely because of the affordability and accessibility of their retail offerings.

If you’re looking for a new card to take advantage of these holiday deals, Bankrate’s Rossman says he’s a big fan of cash back credit cards and looks for opportunities to stack discounts around the holidays. “I’ll take advantage of a store promotion and pay with a rewards credit card and also go through an online shopping portal such as Shop Through Chase,” he says. “That’s three ways to save on the same purchase. I also make sure to check out card-linked offers such as Amex Offers and Chase Offers to see if those can help me save on holiday gifts.”

Be financially savvy with your credit card

While using your credit card to garner points with your holiday shopping can help you offset the cost of holiday gifts or travel, it’s still important to be financially savvy about your card.

For one, make sure you know what the APR is for each of your credit cards. The APR is the interest rate that applies in case you don’t pay off your purchases in full and carry a balance after your due date. Remember that if you carry a balance, you will not enjoy an interest-free grace period on your purchases, which would mean you will not enjoy the savings you aimed for on your shopping. Also familiarize yourself with your card’s fees, such as late fees, which may become a factor if you get behind on payments during the holiday season. And keep in mind that not every card offers an interest-free grace period on purchases, so make sure you check your terms document and understand when your issuer charges interest.

Next, know what your cards’ credit limits are, and use them wisely. If possible, try not to spend more than 30 percent of your credit limit, since experts advise that keeping your credit utilization (which counts for 30 percent of your score) below this point is best. Don’t get carried away with your spending. The Bankrate holiday travel survey finds that 25 percent of people who are planning a vacation feel the pressure to spend more than they are comfortable with.

Finally, if you’re planning to open a new credit card for your holiday purchases, look for one that offers long-term value beyond the rewards you have your eye on. Consider its other benefits and weigh the rewards and benefits against its APR and fees. During the holiday season and beyond, try to use cards that align with your lifestyle and spending habits so that you aren’t making unnecessary purchases to rack up rewards.

FAQs

• Do you earn points when you spend or pay?

  Most credit cards will award you points for your spending, though some also offer additional rewards when you make a payment. If a card offers you 2X points in a certain category, for example, it will award you two points for each dollar you spend on eligible purchases. Each type of spending may be awarded a different number of points, depending on the issuer. For instance, you might get more points on your grocery shopping with one card and less on your gas purchases.
  

• How can I save money on holiday shopping?

  Use a credit card that offers the best rewards for the sort of spending you plan to do, and look for opportunities to stack discounts around the holidays. For instance, you could take advantage of a store promotion and also pay with a rewards credit card while making your purchase through an online shopping portal. That way you can enjoy multiple savings on the same purchase. Credit cards also make card-linked offers, such as Amex Offers and Chase Offers, that can also help you save on holiday gifts.
  

• Is shopping with points worth it?

  Many rewards credit cards offer the ability to shop using points within their issuer portals. However, be aware that these types of redemptions may not offer the greatest possible value for your points. For example, with the Chase Sapphire Preferred® Card, you can redeem points for merchandise at a value of one cent apiece. However, if you use them to book travel through the Chase Ultimate Rewards portal, you’ll earn a 25 percent bonus that makes your points worth 1.25 cents each.
  

• How do you use reward points for shopping?

  You can redeem your rewards points through your credit card’s rewards portal, which you can access online or through your mobile app. You can typically redeem your points for gift cards or apply them to make purchases offered by retailers. Points could also be applied to airline fares by booking on certain sites, such as Chase travel. If you’ve earned points with an airline or hotel credit card, you will typically be able to use them for travel or accommodation with that specific brand.