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5 tips to maximize rewards and avoid debt this holiday shopping season

Dec. 14, 2021
7 min read
Mother and son at a Christmas market
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Editor’s note: This article has been updated with new information.

The holiday season can be a joyous yet stressful time of year that puts a financial strain on many Americans. We here at TPG are always advocates of adhering to a budget and avoiding carrying a balance on your credit cards. However, you could be missing out on rewards and savings if you don't use a credit card for your holiday shopping purchases.

Today, I’m walking through a few tips on how you can use a credit card to save money, maximize rewards and avoid going into debt this holiday season.

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Make a plan and a budget

Figure out who's on your gift list and how much you want to spend before you start shopping. (Photo by DRAKULA IMAGES/Getty Images)

First things first: Map out your holiday shopping plans and set a general budget for spending. What people are you shopping for? How much are you planning to spend on gifts? What other expenses should you factor into your holiday budget? These are all good questions to help you set expectations and prevent impulse buys that can lead to overspending.

Don’t forget to factor in larger grocery and dining expenses for any family that may visit, as well as additional gas and transit costs.

Related: Which budgeting technique is right for you?

Utilize credit card perks and statement credits

There are many stocking stuffers you can get using your Amex Platinum's Saks Fifth Avenue credit. (Photo by John Lamparski/Getty Images)

One of the best things about rewards cards is that they often come with perks that help you save money. For example, The Platinum Card® from American Express comes with an up to $50 Saks Fifth Avenue statement credit that you can use once every six months (up to $100 statement credit annually; enrollment required).

Or, if you have a travel lover in your life, you can use a credit card’s Global Entry/TSA PreCheck credit to cover their up-to-$100 application fee.

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Amex and Chase frequently have excellent offers available across credit cards to help you save money when shopping with popular retailers. For example, I currently have Amex Offers on my Delta SkyMiles® Reserve American Express Card at retailers such as Madewell, Dyson, BlueApron (which I am considering getting as a gift for my sister at college) and even a "Shop Small" offer for rewards shopping with select small businesses. Enrollment is required for select benefits.

With my Chase Sapphire Preferred Card, I have Chase Offers at retailers including Whole Foods, World of Hyatt, Sam's Club and more.

Related: Three changes Chase Offers should make to compete with Amex Offers

Don’t ignore shopping portals

Using a shopping portal to make online holiday purchases could earn you additional cash back or miles on top of your credit card rewards. (Photo by filadendron/Getty Images)

We talk a lot about shopping portals during this time of year, and that’s because forgetting to use them is essentially throwing away more money.

By doing your online holiday shopping through a portal, you can earn bonus points or cash back at a massive number of online retailers. Most of the major U.S. airlines have shopping portals to help you earn additional miles on every eligible purchase, or you can use third-party portals such as Rakuten to earn cash back.

I suggest using a shopping portal aggregator like CashbackMonitor to find the best portal for each online purchase. That way you don’t have to sift through each portal’s offers individually. If you are a Rakuten user, you can also download the Chrome extension, which will notify you while browsing if there is a cash-back offer (or points-back offer, if your account is set up to earn Membership Rewards) that you can activate.

Related: Your guide to maximizing shopping portals for your online purchases

Use cash-back credit cards

We’re big fans of points and miles at The Points Guy — and for good reason. But points and miles are more of an investment to save on future travel purchases. If you are looking for a more immediate payout of your rewards to save money on non-travel expenses this holiday season, cash-back cards are the way to go.

A flat-rate cash-back card such as the Citi® Double Cash Card (see rates and fees) is an easy way to earn rewards no matter where you shop, and you can then use those rewards as a statement credit to offset the cost of your bills. The Chase Freedom Unlimited is another option that earns at least 1.5% back on every purchase.

If you’re shopping with larger retailers or online shops that offer PayPal as a payment method, using a rotating category card is also a great choice.

Related: Best cash-back credit cards of 2021

Financing options

Financing offers can help you avoid interest fees. (Photo wutwhanfoto/Getty Images)

While carrying a balance is never optimal, if you play your cards right, you can still finance larger purchases over time without paying exorbitant amounts in interest. Plenty of rewards credit cards offer a 0% introductory APR period for new purchases, and if you budget to pay off your holiday shopping before that introductory period ends, you could finance your spending without paying any interest.

Another option is using one of the new financing options some credit cards have released this year. Chase and Amex both have solid financing options for purchases over $100. With each program, you choose a set payment plan that includes a flat monthly fee rather than interest. I did the math on a recent guide comparing these two financing options, and you almost always save money using these programs versus paying out interest over time to pay off your purchases.

Related: My Chase Plan vs. Amex’s Pay It® Plan It®

Bottom line

Overspending on a credit card is never a good idea, but that doesn’t mean you shouldn’t use credit cards to maximize your holiday shopping. By setting a budget, using the right card for purchases and taking advantage of card perks and shopping deals, you can make it out of the holiday season with no debt to worry about in the new year.

Additional reporting by Stella Shon.

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.