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Update: Some offers mentioned below are no longer available – The Amex EveryDay Preferred Credit Card from American Express, Barclaycard Arrival Plus World Elite Mastercard, Capital One Venture Rewards Credit Card
The holiday shopping season offers not only doorbuster discounts and seasonal specials, but also plenty of opportunities to maximize travel rewards. Today TPG Senior Points and Miles Correspondent Jason Steele offers tips to help you get the most out of your holiday spending.
As travel rewards enthusiasts, our perspectives on holiday shopping differ from those of most shoppers. We’re interested not just in savings, but also in earning the most valuable rewards for our purchases.
Here are some of the factors worth considering when choosing a credit card strategy for your holiday shopping:
One of the reasons I find myself perpetually declining offers to apply for store credit cards is that I know they offer uncompetitive rewards in return for my application. For example, the Macy’s credit card offers you 20% off of new purchases on the day you apply and the following day, but limits savings to $100, and doesn’t count purchases of “services, select licensed departments, Gift Cards, restaurants, gourmet food and wine.” So even if you feel like spending $1,000 on eligible purchases at Macy’s, your effective sign-up bonus is just $100, which is well below the average sign-up bonus for a travel rewards credit card.
In contrast, the Barclaycard Arrival Plus World Elite Mastercard currently offers 50,000 miles (worth about $500 in travel statement credits) after you spend $3,000 within 90 days of account opening. Capital One Venture Rewards Credit Card also offers 40,000 miles (worth $400 in travel statement credits) with the same minimum spending requirements. There are several cards offered by airlines and hotels that feature 40,000 – 50,000 points or miles that can have even more value when used strategically.
These generous sign-up bonuses can figure into holiday shopping in a different way. For example, if you just signed up for the Chase Sapphire Preferred with the offer of 40,000 points after spending $4,000 within three months, then holiday shopping is a great way to meet this requirement. To look at it another way, Sapphire Preferred cardholders working toward earning their sign-up bonus are essentially earning an additional 10 points per dollar spent.
Maximizing Rewards for Spending
Once you’ve utilized the best available sign-up bonuses, the next step is to earn the most possible rewards from your holiday shopping by leveraging your credit card’s bonus categories.
For the fourth quarter of 2014, Chase Freedom is offering 5x rewards on up to $1,500 of eligible spending at Amazon.com, Zappos.com, and at select department stores. Although these rewards are referred to as “cash back,” but you can transfer points to Chase Ultimate Rewards if you also have an affiliated card like the Ink Plus or Sapphire Preferred. You can then take advantage of all the Ultimate Rewards transfer partners, including airlines, hotels, and Amtrak. In addition, Freedom cardholders can transfer points to a card account held by a spouse or domestic partner.
Another way to boost your rewards is by using gift cards to shift your spending to a bonus category. For example, Office Max sells variable load Amazon gift cards (between $20 and $500) with no fees. Using a card that earns 5x points at office supply stores (like the Ink Plus or the Amex SimplyCash Business Card), you can effectively earn those 5 points per dollar for your Amazon purchases. This gift card strategy applies to dozens of different gift cards offered at office supply stores, department stores, grocery stores, gas stations, or anywhere your card earns a spending bonus.
Leveraging Credit Card Benefits
Award travelers tend to focus on the value of rewards earned from spending, but credit cards have other benefits you should consider when shopping. Many cards offer purchase protection policies that can include return protection, price protection, or insurance against theft and damage. For example, Citi offers its Price Rewind program, which returns the difference to you when the price of an eligible purchase drops within 60 days. Cardholders have to register their purchases, but otherwise the program works automatically to offer credits.
Many American Express cards feature return protections that offer refunds for eligible items when retailers won’t accept a return within 90 days. Another great feature is extended warranty coverage, which adds an additional year to manufacturer warranties.
Cherry Picking the Best Retail Credit Cards
Most retail credit cards come with inferior rewards, marginal discounts, and often non-existent sign-up bonuses. I don’t blame you for just offering a knowing smile when you decline those card application pamphlets at the checkout counter. However, there are a few exceptions.
The Target REDcard (credit card) offers 5% off of all Target purchases along with free shipping for online orders. While this compares favorably to most travel rewards cards, I would still rather have the 4.5 American Express Membership Rewards points offered by the Amex Everyday Preferred card for grocery store purchases when cardholders make 30 transactions in a statement period (otherwise 3 pts/$). Some Super Target locations are categorized as grocery stores, so spending there may be eligible to earn the bonus.
Other worthwhile cards include:
- The Lowe’s consumer credit card, which also offers 5% off all purchases, and can even be combined with other coupons or discounts.
- The Pottery Barn credit card, which offers rewards worth 10% off when customers make purchases of $250 or more.
Plenty of credit cards are offering promotional discounts for the holidays. The big one this week is Amex Small Business Saturday, which allows cardholders to receive $10 off any purchase of $10 or more at eligible businesses on Saturday, November 29 (up to $30 total per card). You can register each Amex card, including those issued by other banks and separate cards for authorized users on the same account.
This Saturday, you can essentially receive $30 of free merchandise by making three $10 transactions at your local small business. In the past, I have made qualifying purchases of gift certificates at my favorite independently owned restaurants, book stores, and other shops.
American Express offers other promotions through Amex Sync offers on Twitter, Facebook, and other social media platforms, as well as through the Amex Offers tab on your online Amex account. It takes just a few seconds to connect your accounts, which allows you to receive discounts (sometimes up to 100%) at a wide range of merchants.