Your complete guide to maximizing holiday purchases
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Editor’s note: This guide has been updated with the latest information.
We are well into this year’s holiday season, which means you may be looking to snag the perfect gifts for your friends and family members.
But, as a travel rewards enthusiast, there’s a critical decision you need to make when it comes to these purchases. Specifically, you must decide whether to pay for gifts outright or redeem your points and miles to keep cash in your pocket. There are positives and negatives to each approach, as well as some key pitfalls to avoid.
It’s important to note at the outset that everyone has their own approach to getting the most value out of credit cards, points and miles. Some would never think about redeeming them for gifts, as they prefer to save them for premium class flights or aspirational hotel stays.
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 your holiday purchases? Let’s dive in.
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Choosing the right credit card(s)
One of the most important things you can do this holiday season is simple: use the right credit card(s) for your purchases.
Of course, there’s no single “right” credit card for everyone to use for 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 bonus categories for the places you’ll be shopping this year.
Earn a bonus on a new card
If you plan to spend a sizeable amount of holiday shopping, now may be a good time to sign up for one of the best travel rewards cards. Several cards currently offer sign-up bonuses of 100,000 points or more. And, many cards can provide you $1,000 or more in first-year value.
Most cards offer initial welcome bonuses that require a set amount of spending in the first few months. And some cards 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) might be the perfect time to open a new card. If you’re looking for a new card to add to your wallet, three cards that currently offer attractive welcome offers include:
- The Platinum Card® from American Express: Earn 75,000 Membership Rewards points after you spend $5,000 in your first six months of account opening, plus earn 10x points at U.S. gas stations and U.S. supermarkets (on up to $15,000 in combined eligible purchases) during your first six months of account opening.
- American Express® Gold Card: Earn 60,000 Membership Rewards points after you spend $4,000 in your first six months of account opening.
- Capital One Venture Rewards Credit Card: Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3,000 on purchases in the first 3 months.
Cards that earn bonus rewards on holiday spending
Another option is to use a card that earns bonus rewards at merchants popular for holiday shopping. In particular, here are some of the best cards for holiday purchases:
- Chase Freedom Flex and Chase Freedom (no longer open to new applicants): These cards earn 5% cash back on up to $1,500 spent in the fourth quarter of 2020 with PayPal and Walmart. While technically cash-back cards, you can combine your earnings with points from your Chase Sapphire Preferred Card, Chase Sapphire Reserve or Ink Business Preferred Credit Card to become fully transferable Ultimate Rewards points. To learn more, check out our post on how to transfer Ultimate Rewards points between accounts.
- Discover it Cash Back: This card offers 5% cash back on up to $1,500 spent in the fourth quarter of 2020 with Amazon.com, Walmart.com and Target.com (once you activate).
- Chase Freedom Unlimited: This card earns at least 1.5% cash-back on all purchases. And, like the Chase Freedom Flex and Chase Freedom, you can combine points with other Chase-issued credit cards to turn your earnings into fully transferrable Ultimate Rewards points.
- The Blue Business® Plus Credit Card from American Express: This card offers 2x Membership Rewards points on all purchases up to $50,000 spent each calendar year (then 1x). Based on TPG’s valuations, this equates to a 4% return on up to $50,000 spent.
- Capital One Venture Rewards Credit Card: This card earns at least 2x Capital One miles on all purchases. TPG’s valuations estimate Capital One miles are worth 1.7 cents each when transferred to travel partners.
- Citi® Double Cash Card: This card earns up to 2% cash back (1% when you buy and 1% when you pay) on all purchases. However, if you have a Citi ThankYou Rewards card, such as the Citi Prestige® Card or Citi Premier® Card, you can convert your cash-back rewards to ThankYou points.
- The Amex Everyday® Preferred Credit Card from American Express: This card offers 3x Membership Rewards points at U.S. supermarkets (up to $6,000 per year), 2x points at U.S. gas stations and 1x points 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 supermarket for a loved one and earn up to 4.5x points on that purchase.
The information for the Discover it Cash Back, Citi Prestige and Amex Everyday Preferred cards has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Most of the cards mentioned above are best for everyday spending that doesn’t fall into a specific bonus category. However, you may be able to make some holiday purchases with merchants that fall into common credit card bonus categories such as groceries, dining and entertainment. In that case, you’d want to use a card that earns bonus rewards for that spending category.
Add an authorized user
Of course, if you’re looking to take advantage of these credit cards for gifting purchases, consider adding a loved one as an authorized user on a card. After all, some cards offer excellent perks for authorized users.
The Platinum Card® from American Express, for example, allows you to add up to three additional Platinum cardholders for an extra $175 in annual fees (see rates and fees). This works out to just $58.33 per person per year if you add three additional Platinum cardholders. By adding someone as an additional Platinum cardholder on your account, you’ll unlock valuable perks for him/her. These perks include Centurion Lounge access, Priority Pass Select membership, access to Delta Sky Clubs when flying Delta-operated flights and automatic Hilton Gold and Marriott Gold Elite status. Enrollment required for select benefits.
Using online shopping strategies
This year, you’ll probably be doing a lot of your holiday shopping online. Fortunately, there are many ways to make the most of online purchases. 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. Specifically, 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. Or, in some cases, you can install a shopping portal extension for your browser. 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 online shopping portals include:
- Shop through Chase
- Barclays RewardsBoost
- Citi Bonus Cash Center
- Alaska Airlines MileagePlan Shopping
- American Airlines AAdvantage eShopping
- Delta SkyMiles Shopping
- Southwest Rapid Rewards Shopping
- United MileagePlus Shopping
Although many of these portals are run by the same company (and thus look the same), the payouts can differ. Fortunately, there’s an effortless way to quickly compare earning rates: use a shopping portal aggregator like Evreward or 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.
If you have one or more American Express cards, you’ll want to pay close attention to the Amex Offers section of your online account(s). These targeted offers cover a wide variety of merchants that could be great options for your holiday gift needs.
To check your Amex Offers, log in to your American Express account and scroll down to the Amex Offers & Benefits section. You’ll have a unique list of Amex Offers for each Amex card on your account. And, you’ll need to opt-in for any offers you might want to use.
Unfortunately, you can only add each specific offer to one card. So if you have multiple American Express cards, choose your card carefully and remember to use the correct card with making your purchase. There’s no hard limit to the number of Amex Offers you can add to an account.
In some cases, you can stack Amex Offers for cash back and bonus points. And, since Amex Offers are usually based on the merchant and amount charged to your card, you can click through a shopping portal for additional earnings. By combining Amex Offers with earnings from 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. Here are a few ways to accomplish this.
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 Macy’s through the AAdvantage eShopping portal at the time of writing:
And, you may find that some airline shopping portals offer extra bonuses during the holiday season if you hit specific spending thresholds.
Find your own coupons
Even if there are no discounts listed on your preferred portal, you may be able to find some. However, note that 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. So, if you type in a different code, you may not earn rewards through the portal.
Here are some ways to find coupons:
- A simple online search: Type in the name of your retailer and “coupon code” into your favorite search engine and you’ll often find publicly-available offers on sites such as RetailMeNot or CouponCabin.
- Download the Honey browser extension: Honey is a browser extension that automatically scans the internet for coupon codes.
- Sign up for emails: Some 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.
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 tempting, especially when you are offered an instant 10% or 20% off and ongoing rewards.
However, store credit cards are rarely worth it. For starters, it’ll usually result in a hard pull 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. Besides, it’s highly unlikely that your discount would equal the value of a welcome bonus for a new travel reward card.
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 you can get more than $1,000 in value in your first year from the best rewards credit cards. And some cards even offer 100,000-point sign-up bonuses. So, score credit cards can’t compete when it comes to sign-up bonuses.
Store cards also tend to offer pretty poor rewards for your spending. That being said, you should consider signing up for store-specific loyalty programs, especially if you plan to use the retailer in the future. 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
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 want 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 loyalty programs offer numerous ways to redeem your rewards for merchandise and gift cards.
Here’s a rundown of the major programs.
American Express Membership Rewards points
American Express Membership Rewards points are worth two cents each based on TPG’s latest monthly valuations. But, in most cases, you’ll be lucky to receive even 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 if you redeem for Apple gift cards. However, some gift cards, like The Home Depot, offer one cent per point in value.
You can also use your Membership Rewards points to pay with points at checkout when shopping with select online retailers. One of these retailers is Amazon, where your points are worth 0.7 cents apiece.
Chase Ultimate Rewards points
Chase Ultimate Rewards points are worth two cents each, according to TPG’s latest monthly valuations. These points are typically worth about half that when redeemed for gift cards, merchandise and other non-travel options. Most retail gift card awards have a value of one cent per point. However, as of this writing, there are about a couple dozen different gift card options that offer you 10% more value, including Lowe’s, Apple, Chipotle, Petsmart and Bath and Body Works. For these cards, you’d get a value of 1.11 cents per point.
You can also use your Ultimate Rewards points to shop directly with Amazon, but you’ll only receive 0.8 cents per point when doing so. In contrast, you’ll receive 1.25 cents per point when booking travel reservations directly through Chase’s Ultimate Rewards Travel Center if you have a Chase Sapphire Preferred Card or Ink Business Preferred Credit Card. Better yet, you’ll receive 1.5 cents per point in value when booking through the Chase Travel Center if you have the Chase Sapphire Reserve in your wallet. Not only is redeeming Chase points through Amazon a poor value proposition, but a compromised account could wipe your Chase balance away.
Finally, Chase Pay Yourself Back is a worthy option to redeem points for statement credit. Through Sept. 30, 2021, Chase Sapphire Reserve customers can redeem points at 1.5 cents apiece while Chase Sapphire Preferred customers can redeem Ultimate Rewards at 1.25 cents each to offset purchases made at grocery stores, home improvement stores and dining establishments, including take-out and delivery services.
Citi ThankYou Rewards points
Citi ThankYou Rewards points are worth one cent each towards gift cards and 0.8 cents each toward Shop with Points at Amazon. However, Citi ThankYou points are worth 1.7 cents each, according to TPG’s latest monthly valuations.
Holders of cards like the Citi Premier® Card would likely be better off transferring points to one of the Citi ThankYou Rewards transfer partners. If you transfer your points to an airline or hotel partner, you can get a lot of value when you redeem for last-minute awards or premium experiences. You can also transfer your ThankYou points to any other ThankYou Rewards member for free, which could make for a good gift.
Capital One Venture Rewards miles
Capital One Venture Rewards miles are worth one cent each when you redeem for travel statement credits and select non-travel statement credits. Or, you can redeem for gift cards at a rate of 0.8 to one cent per mile. You can also redeem miles to Shop with Amazon at a rate of 0.8 cents per mile.
However, TPG’s most recent valuations peg the value of Capital One miles at 1.4 cents each. So, you’ll generally be better off transferring your Capital One miles to hotel or airline partners. You can also share your Capital One miles with anyone, which can make for a good gift.
Airline and hotel programs
Most airline and hotel loyalty programs offer the ability to redeem rewards for merchandise and gift cards. But, you’ll almost always receive inferior value compared to travel rewards.
If you want to turn your airline miles or hotel points into a gift, consider redeeming your rewards to book travel for others. This will almost certainly provide better value than redeeming your points or miles for gift cards or merchandise.
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 transfer options don’t exist, 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 points for award travel and pay for gifts out of pocket. However, if your account balances are overflowing or you value the cash savings of redeeming for merchandise or gift cards, feel free. As the saying goes, value is in the eye of the beholder.
There are many ways to make the most of your holiday purchases this year. Most programs provide straightforward 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.
Keep in mind that almost every program allows you to book travel for others too. This might be the ultimate gift this holiday season: spending your hard-earned miles to send a friend or family member on a trip once they’re ready to travel again.
Additional reporting by Chris Dong, Katie Genter and Liz Hund.
For rates and fees of the Amex Platinum Card, please click here.
Featured image by Daniel_Dash/Shutterstock.
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