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We are entering the holiday season, that time of year when the weather cools, the holiday displays come out (too early for some) and consumer spending reaches a frenzy. As an award travel enthusiast, there’s a key decision you need to make when it comes to getting the perfect gifts for your friends and family members: whether to pay for them outright or redeem your points and miles to keep cash in your pocket. There are positives and negatives to each as well as some key pitfalls to avoid, so today we’ll take a look at the best ways to maximize your holiday purchases in 2018.

In This Post

It’s important to note at the outset that everyone has his/her own approach to getting the most value out of their points and miles. Some would never think about redeeming them for gifts, as they prefer to save them for premium class flights or luxurious hotel rooms. Others consider them as an actual currency, primarily using them to defray the out-of-pocket costs of everyday life. At the end of the day, as long as you’re spending within your means this holiday season, there’s no “wrong” way to approach your shopping this year.

So how can you make the most of these purchases, and what are the best options to redeem them for gifts? Let’s dive in.

Choosing the Right Credit Card(s)

Swiping the right credit card is a critical element of making the most of your holiday purchases.

One of the most important things you can do this holiday season is simple: use the right credit card(s) for your purchases. This can start today by signing up for a new travel rewards card. Most of these cards offer initial welcome bonuses that require a set amount of spending in the first few months, and many will even waive the annual fee in the first year. If you’ve stayed away from applying for a card because you doubted your ability to reach that spending threshold, the holidays (and spending that goes along with them) may be the perfect time to open a new card like the Chase Sapphire Preferred Card or Citi / AAdvantage Platinum Select World Elite Mastercard.

Of course, there’s no single “right” credit card for everyone to use for all holiday purchases. It instead will depend on your purchase and your priorities. Your first choice should be a new card on which you are trying to earn a welcome bonus. After that, you’ll want to look at cards with bonuses categories for the places you’ll be shopping this year.

Here are some good choices for buying gifts this holiday season:

  • Chase Freedom: Currently offering 5% cash back on up to $1,500 spent in the fourth quarter (October, November and December) at department stores, wholesale clubs and using Chase pay. While technically a cash-back card, your earnings can be combined with points from your Sapphire Preferred, Chase Sapphire Reserve or Ink Business Preferred Credit Card to become fully transferable Ultimate Rewards points. For more information on this strategy, reach Nick Ewen’s post on How to Transfer Ultimate Rewards Points Between Accounts.
  • Chase Freedom Unlimited: This card offers an unlimited 1.5% cash-back on all purchases, and like the standard Chase Freedom, you can combine points with other Chase-issued credit cards and turn your earnings into full Ultimate Rewards points.
  • The Blue BusinessSM Plus Credit Card from American Express: This card offers 2x points on all purchases up to $50,000 spent each calendar year; then 1x.
  • Barclaycard Arrival Plus World Elite Mastercard: This card offers double miles on all purchases, with a 5% rebate when your redeem your miles for travel purchases.
  • Capital One Venture Rewards Credit Card: This card also offers 2x miles on all purchases, and points can be redeemed for one cent each as statement credits towards travel purchases.
  • The Amex Everyday® Preferred Credit Card from American Express: This card offers 3x points at US supermarkets (up to $6,000 per year), 2x points at US gas stations and 1x elsewhere. But when you make 30 or more transactions in a statement period, you’ll get a 50% bonus on the points earned. This means that you could pick up a gift card or nice bottle of wine at a grocery store for a loved one and earn up to 4.5x points per dollar spent on that purchase.

For some more recommendations, read Ethan Steinberg’s post on The Best Credit Cards for Everyday Spending After the Amex SPG Changes and Summer Hull’s post on The Six Best Credit Cards for Everyday Spending.

Of course, if you’re really looking to take advantage of these credit cards for gifting purchases, consider adding a loved one as an authorized user on a card that would grant them perks and privileges. The Platinum Card® from American Express, for example, allows you to add up to three additional cardholders for an extra $175 in annual fees (which works out to just $58.33 per person, per year). This would unlock valuable perks for him/her, including Priority Pass Select membership, access to Delta Sky Clubs when flying Delta-operated flights and automatic Hilton Gold and Marriott Gold Elite status.

Using Online Shopping Strategies

Photo by Busakorn Pongparnit / Getty Images
You can stack your credit card earnings with various online shopping strategies to extend the return on your holiday purchases. Photo by Busakorn Pongparnit / Getty Images

Unless you’re a sucker for in-store craziness like Black Friday, you’ll probably be doing a lot of your holiday shopping online. Fortunately there are many ways to make the most of these purchases as well. Let’s take a look.

Online Shopping Portals

One of my favorite strategies to maximize online purchases allows you to earn bonus points, miles or even cash-back on a wide variety of online transactions. Most airline, hotel and credit card reward programs have an online shopping portal that offers you additional rewards at featured retailers. All you need to do is start at the portal instead of going directly to the seller’s site. Many popular online retailers participate in these portals, including Target, Home Depot, Macy’s and hundreds of others. It’s a quick and nearly pain-free way to boost your earnings this holiday season.

Popular portals include:

Although many of these portals are run by the same company (and thus look the same), the payouts can be very different. Fortunately, there’s a very easy way to quickly compare earning rates and decide which one to use: a shopping portal aggregator like EVReward and Cashback Monitor. These sites show a side-by-side comparison of the bonuses you’ll earn across these portals, so you don’t need to fire up each one individually every time you make an online purchase comparison sites. For more information, read Brendan Dorsey’s post on Using a Shopping Portal Aggregator to Maximize Purchases.

Amex Offers

If you specifically have an American Express credit card, you’ll definitely want to pay close attention to the Amex Offers section of your online accounts. These targeted offers cover a wide variety of merchants that could be great options for your holiday gift needs. To see your list, login to your American Express account and scroll down to the Amex Offers & Benefits section. You’ll have a unique list for each Amex card on your account, and you’ll need to opt-in for any offers you might possibly use.

Unfortunately you can generally only accept an offer for a given retailer on one card. In fact, Amex is now trying claw back credits people received by working around this restriction. So if you have multiple American Express cards, choose your card carefully and remember the selection. However, since these discounts or bonuses are usually based on the total price of the purchase, you should be able to utilize them and click through a shopping portal for additional earnings.

By combining these offers and the bonuses through online shopping portals, you can receive some impressive discounts on your holiday shopping.

Coupon Codes and Discounts

Another strategy is simple: taking advantage of online coupon codes and discounts for various retailers. There are a handful of ways to accomplish this:

1. Online shopping portals: If you thought online shopping portals couldn’t get any more lucrative, think again. Before you click through to a retailer, you’ll sometimes see additional discounts or coupon codes listed there. For example, here’s what you’ll find at Neiman Marcus through the AAdvantage eShopping portal at time of writing:

If you make a $400 purchase, you’ll save $100 and earn 3,000 AAdvantage miles and earn points on the credit card you swipe. That’s an impressive triple dip.

2. A simple Google search: Even if there are no discounts listed on your preferred portal, you may be able to find some through an online search engine. Simply type in the name of your retailer and “coupon code” into Google or Bing; you’ll often find publicly available offers on sites like RetailMeNot or CouponCabin. However, many shopping portals include language indicating that purchases made with coupon codes found on other sites won’t be eligible for bonus points or miles. While you may still earn them, typing in a different code may negate the earnings through the portal.

3. Signing up for emails: Finally, many retailers will offer you a one-time discount code if you sign-up for emails. While this may not appeal to those who want to keep their Inboxes uncluttered, it may be worth it if you can save 10 or 15% on a large purchase this holiday season.

Avoiding the Store Card

While the strategies above can allow you to make the most of your holiday purchases, there’s one sales tactic to avoid: applying for store credit cards. When you’re shopping online or in-store this holiday season, you may see an offer from a specific retailer to open a new store card account. It can be really tempting, especially when you are being offered an instant 10% or 20% off and on-going rewards. However, these cards are rarely worth it. For starters, it’ll usually result in a hard inquiry on your credit report and will almost certainly count as a new account, which can come back to bite you later on with certain card issuers. In addition, it’s highly unlikely that your discount would equal the value of a welcome bonus for a new travel reward cards.

For example, if a store card offers you 20% off your $1,000 purchase, that would give you a value of $200. That sounds like a lot, but now compare it to the Arrival Plus, which is currently offering new applicants 60,000 bonus miles after spending $5,000 on purchases in the first 90 days. That’s worth over $600 in travel statement credits, so it’s not even close. These cards also tend to offer pretty poor rewards for your spending, typically 1% back as store credit for most purchases.

That being said, you should definitely consider signing up for and store-specific loyalty programs, especially if you plan to use the retailer in the future. One store that recently updated its program is Nordstrom’s Nordy Club. While these programs may offer more compelling rewards to holders of their respective stores’ credit cards, it’s nevertheless a relatively painless way of boosting your rewards even further.

Using Points and Miles for Holiday Purchases

A man is holding an Amazon Prime package on March 20, 2018 in Berlin, Germany. (Photo by Thomas Trutschel/Photothek via Getty Images)
You can also redeem your points and miles for gift purchases at retailers like Amazon.com, but is it a good value? (Photo by Thomas Trutschel/Photothek via Getty Images)

Rather than paying for your gifts this year, you may be looking to redeem your points or miles for those purchases. This can happen when you’re wanting to minimize your out-of-pocket expenses or when you have an abundance of reward points and miles. Even though you generally get more value from travel redemptions, most airline, hotel and credit card loyalty programs offer numerous ways to redeem your rewards for merchandise and gift cards.

Here’s a rundown of the major programs and how they allow you to redeem your rewards for gift cards and merchandise:

Credit card programs

American Express Membership Rewards

American Express Membership Rewards points are worth 1.9 cents each based on TPG’s latest monthly valuations, but you’ll be lucky to receive half that value when you redeem your points for gift cards or merchandise. You’ll only receive 0.5 cents per point when choosing American Express gift cards, and points redeemed for many retailers’ gift cards will result in values below one cent per point. For example, you only get 0.85 cents per point towards Apple App Store & iTunes gift cards. However, some gift cards, like The Home Depot, offer one cent point in value.

You can also use your Membership Rewards points to shop directly with retailers such as Amazon.com, BestBuy.com, Newegg.com and others. In these instances, your points are only worth 0.7 cents apiece. It only gets worse when you redeem points for event tickets at Ticketmaster and AXS, where you only get 0.5 cents per point in value.

Chase Ultimate Rewards

Chase Ultimate Rewards points are worth 2.0 cents each according to TPG’s latest monthly valuations, but these points are typically worth about half that when redeemed or gift cards, merchandise and other non-travel options. Most retail gift card awards have a value of one cent per point, but Chase does currently have a list of deals that can give you slightly more value. As of this writing, there are about nine different gift card options that offer you 10% more value than others, including Macy’s, Google Play, Petco, Overstock.com and Microsoft:

Finally, you can also use your Ultimate Rewards points to shop directly with Amazon, but you’ll only receive 0.8 cents each. In contrast, you’ll receive 1.25 cents per point when booking travel reservations directly through Chase’s Ultimate Rewards Travel Center using your Sapphire Preferred or Ink Preferred cards. Better yet, you’ll receive 1.5 cents per point in value on these redemptions if you have the Sapphire Reserve in your wallet. Not only is redeeming Chase points through Amazon a poor value proposition; a compromised account could wipe your Chase balance away. For more information on a near miss along these lines, read Nick Ewen’s post on Why You Shouldn’t Activate Shop With Points at Amazon.

Citi ThankYou Points

Citi ThankYou points are usually worth one cent each towards gift cards or merchandise options, although there have occasionally been sales that give you 10% more value towards some gift cards. However, these points are worth 1.7 cents each according to TPG’s latest monthly valuations.

Therefore, holders of cards like the Citi Premier Card would likely be better off redeeming them for 1.25 cents each for airfare or transferring them to the program’s  partners and redeeming them for expensive last-minute tickets or awards in business or first class. You can also transfer your ThankYou points to any other ThankYou Rewards member for free, which could make for a good gift. For more information, read TPG Senior Points and Miles Correspondent Richard Kerr’s post on Redeeming Citi ThankYou Points for Maximum Value

Barclaycard Arrival Plus

When you redeem your Barclaycard miles for gift cards, you’ll only get a half a cent each for them. You are much better off redeeming these miles for once cent each as travel statement credits. For more information, read TPG’s post on the Top 10 Ways to Maximize Barclaycard Arrival Miles.

Capital One Venture

Capital One miles are worth one cent each for travel or gift cards. However, you can also transfer your miles to someone else. For more information, read Benji Stawski’s post on How to Redeem Capital One Venture Miles.

Discover it® Miles

Miles from the Discover it Miles card are worth one cent each towards travel statement credits, gift cards or merchandise, so there’s really no advantage for redeeming these miles for gift cards. For more information about this card, read Summer Hull’s post on 5 Reasons Families Need a Discover it Miles Card.

Airline and hotel programs

Most airline and hotel loyalty programs offer the ability to redeem rewards for for merchandise and gift cards, but you’ll almost always receive inferior value compared to travel rewards. This is one of the reasons you might consider redeeming your rewards to book travel for others instead of giving gift cards or merchandise. However, if you do want to investigate these redemptions, they do vary by each individual airline, so I encourage you to visit the individual sites below for all of your options:

Should you do it?

When you have the option of transferring points to airline miles or hotel points, as you do with Chase Ultimate Rewards, American Express Membership Rewards, and Citi ThankYou Rewards, you can come out far ahead of any merchandise or gift card options. However, when the point transfer option doesn’t exist, such as with miles from Barclaycard Arrival Plus, Capital One Venture and the Discover it cards, then you may be able to get the same value when redeeming your rewards for gift cards or merchandise.

At the end of the day, it’s up to you in terms of how you want to redeem your points. For many people, it’s better to save your points and miles for travel awards and pay for your gifts, using the strategies above to earn the highest possible rewards. However, if your account balances are overflowing or you value the cash savings of redeeming them for merchandise or gift cards, feel free. As the saying goes, value is in the eye of the beholder.

Bottom Line

Earning Points and Miles credit card online shopping
There are many ways to make the most of your holiday purchases this year. (Photo by @chibelek via Twenty20)

There are many ways to make the most of your holiday purchases this year, and most programs will even provide straight-forward ways to redeem points and miles on gifts for your loved ones. However, you’ll generally get more value from transferring points to partner programs or redeeming them directly for travel purchases, and keep in mind that almost every program allows you to book travel for others too. This might truly be the “ultimate” gift this holiday season: spending your hard-earned miles to reunite with a friend or family member.

Featured image by Eva Katalin Kondoros / Getty Images

The Platinum Card® from American Express

The American Express Platinum card has some of the best perks out there: cardholders enjoy the best domestic lounge access (Delta SkyClubs, Centurion Lounges, and Priority Pass), a $200 annual airline fee credit as well as up to $200 in Uber credits, and mid-tier elite status at SPG, Marriott, and Hilton. Combined with the 60,000 point welcome offer -- worth $1,140 based on TPG's valuations -- this card is a no-brainer for frequent travelers. Here are 5 reasons you should consider this card, as well as how you can figure out if the $550 annual fee makes sense for you.

Apply Now
More Things to Know
  • Earn 60,000 Membership Rewards® points after you use your new Card to make $5,000 in purchases in your first 3 months.
  • Enjoy Uber VIP status and free rides in the U.S. up to $15 each month, plus a bonus $20 in December. That can be up to $200 in annual Uber savings.
  • 5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel.
  • 5X Membership Rewards points on prepaid hotels booked on amextravel.com.
  • Enjoy access to the Global Lounge Collection, the only credit card airport lounge access program that includes proprietary lounge locations around the world.
  • Receive complimentary benefits with an average total value of $550 with Fine Hotels & Resorts. Learn More.
  • $200 Airline Fee Credit, up to $200 per calendar year in baggage fees and more at one qualifying airline.
  • Get up to $100 in statement credits annually for purchases at Saks Fifth Avenue on your Platinum Card®. Enrollment required.
  • $550 annual fee.
  • Terms Apply.
  • See Rates & Fees
Intro APR on Purchases
N/A
Regular APR
N/A
Annual Fee
$550
Balance Transfer Fee
See Terms
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

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

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.