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During the holiday shopping season, you may have a long list of presents to buy for your family and friends. Since you’re reading The Points Guy, I certainly hope that you’re giving careful consideration to which credit cards give you the best rewards and protections for these purchases. Today I want to go through my list of the top cards to use when you buy gifts during the holiday season.
It’s important to note that this list is not exhaustive by any stretch, but instead takes a look at a variety of cards that may appeal to numerous readers out there. Everyone has his or her own criteria for deciding which card is best for holiday shopping, so be sure to crunch the numbers based on your own unique situation.
That being said, here are my top picks for your gift purchases during the holiday season:
1. Discover it® Cash Back
My first pick earns the top spot on the list because of a single retailer: Amazon.com. Yet again, Discover has put Amazon on its bonus category list for the holiday season. This means you can earn 5% cash back on up to $1,500 in combined purchases at Amazon, upon enrollment (as well as at wholesale clubs) between Oct. 1 and Dec. 31.
But if you’re just signing up for the card right now — or have gotten it in the last 12 months — this deal gets even better. That’s because new Discover it Cash Back card holders get all their cash back matched at the end of the first year they have the card. So, new cardholders can earn up to 10% cash back on up to $1,500 in combined purchases at Amazon and wholesale clubs between Oct. 1 and Dec. 31. Plus, earn 1% cash back on all other purchases.
Keep in mind that Amazon isn’t just for merchandise. You can also purchase groceries and other products through the site’s same-day delivery service Prime Now, and can also make the most of your baby purchases through Amazon Family. Amazon also sells gift cards to various retailers like Uber, Airbnb, Starbucks and Old Navy.
Of course, you can always give a friend or family member a gift card to Amazon.com itself; just be aware that Amazon gift cards cannot be used to purchase most retail gift cards on the site.
2. Chase Freedom
Just because Amazon isn’t on the list of Chase Freedom bonus categories this year doesn’t mean the card isn’t worth considering for your holiday purchases. If you’re more of a traditional brick-and-mortar shopper, you’ll find you can get 5% back on purchases at department stores, wholesale clubs and on Chase Pay purchases with the Chase Freedom in the fourth quarter of 2018.
While 5% in cash back sounds great, experienced points and miles hobbyists know that the Chase Freedom is not simply a cash-back card. When it’s paired with a premium Chase card that earns full Ultimate Rewards points — like the Chase Sapphire Preferred Card or the Chase Sapphire Reserve — the cash back can be converted to much more valuable Ultimate Rewards points, which you can transfer to partners like United and Hyatt. That’s why combining the Freedom (or Chase Freedom Unlimited), the Sapphire Reserve and the Ink Business Preferred Credit Card creates a formidable points-earning machine.
So just how valuable is this card through the end of the year? If you drop exactly $1,500 at department stores, wholesale clubs or stores that accept Chase Pay, pay with the Chase Freedom and also have the Sapphire Preferred or Sapphire Reserve, you’ll take home 7,500 Ultimate Rewards points, worth $150 based on TPG’s most recent valuations. If you’re keeping score at home, that’s a return of 10%, not to mention any additional bonuses for going through an online shopping portal.
The Chase Freedom offers a sign-up bonus of $150 cash back after you spend $500 on purchases in your first three months from account opening.
3. Just About Any Citi-Issued Card
Another great option for these purchases doesn’t apply to a single card but rather the vast majority of cards issued by Citi. This is due to the issuer’s strong shopping protections including damage and theft purchase protection, extended warranty protection, return protection and the popular Price Rewind benefit.
Citi’s Price Rewind benefit is the simplest price protection benefit offered by any issuer. If you purchase an item with just about any personal card from Citi (including the Citi Premier Card and the no annual fee Citi® Double Cash Card) and register that purchase on the Price Rewind website, the program will track prices online and will refund you the difference if a lower price is found within 60 days. You can also submit a claim manually if you find a lower price on your own.
Note that some items are excluded for some types of shopping protections. Plus, Citi cards like the Citi Prestige and Citi Premier Card have higher levels of coverage than other Citi cards like the Citi® Double Cash Card— so be sure to check your guide to benefits to learn the full details regarding your coverage.
If you have the ability to park a significant amount of your investments and savings at Bank of America or Merrill Lynch, the Bank of America Premium Rewards credit card is a great option for holiday purchases. While the card comes with a reasonable but not earth-shattering earning rate of 1.5 points per dollar spent on all purchases (which can be redeemed at the rate of 1 cent per point), the real value of this card is realized if you can make it to either the Platinum or Platinum Honors award tiers in Bank of America’s separate Preferred Rewards banking program. By doing so, the everyday earning rate on this card can jump all the way to 2.625 points for every dollar spent, making it a terrific choice for holiday gifts.
The Bank of America Premium Rewards credit card is currently offering a sign-up bonus of 50,000 points if you make at least $3,000 in purchases in the first 90 days — these points are worth $500.
The final card on my list earns a spot for a couple of reasons. The first reason is simplicity; the Citi® Double Cash Card offers a flat 1% back on every purchase plus another 1% back as you pay your bill. While this return rate on everyday purchases doesn’t compare to the potential returns highlighted above, this is automatic, and it results in cold, hard cash in your pocket. With seemingly constant devaluations in the world of loyalty programs and the complexity of booking award tickets, many shoppers may simply want some money back on purchases.
The second reason is a low introductory APR, which could come in handy for holiday purchases. The card carries a 0% introductory APR on balance transfers for 18 months then 15.74%-25.74% variable APR applies. The card doesn’t impose an annual fee and has excellent shopping protections, but it doesn’t come with any type of a sign-up bonus.
Holiday spending can be an excellent way to meet the minimum spending requirement on a new credit card. There are lots of great offers to consider. Plus, some of your current credit cards may offer a calendar-year bonus for spending a certain amount of money on the card. We have an entire guide dedicated to such bonuses, so check it out to see if there are any bonuses you might want to work toward this holiday season. Especially if you’re close to obtaining a bonus, you’ll want to plan to reach the given spending threshold before Dec. 31.
On some purchases I’ll forgo better earnings to get solid purchase protections. As mentioned above, Citi credit cards like the Citi Premier Card and the Citi® Double Cash Card generally provide excellent shopping protections. So, if you’re purchasing something that you think may malfunction just outside its manufacturer’s warranty or may drop in price shortly after you purchase it, be sure the credit card you use offers extended warranty and price protection benefits.
In addition to ensuring that you’re using the right credit cards, it’s critical that you go through an online shopping portal to maximize your earnings. The best thing about online shopping portals is that you don’t have to use a specific card for the purchases. My favorite site for deciding which portal to use is CashBackMonitor.com, as it will compare the earning rates for a given merchant across a variety of different shopping portals.
As you can see, there are many ways to make the most of your purchases during the holiday season. However, every points and miles enthusiast has his or her own way of figuring out the best card to swipe at checkout, so you may have a card that earns more desirable rewards or will help you hit a calendar year threshold bonus. Remember that many online purchases can become even more lucrative by going through an online shopping portal, which will give you additional points or miles (or cash back) just for clicking through the site.
Featured image via Shutterstock.
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