Your complete guide to maximizing holiday purchases
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We are fast approaching this year’s holiday season, which means you may already be working on snagging 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 take a closer look.
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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 will depend on your purchases 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 sizable 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 are:
- The Platinum Card® from American Express: Earn 100,000 points after you spend $6,000 on purchases on the card in the first six months of card membership.
- Ink Business Preferred Credit Card: Earn 100,000 bonus points after you spend $15,000 on the card in the first three months from account opening.
- Capital One Venture X Rewards Credit Card: Earn 75,000 bonus miles when you spend $4,000 on purchases in the first three months from account opening.
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: This rotating category card earns 5% cash back on up to $1,500 spent in the fourth quarter of 2021 with PayPal and Walmart (activation required). While technically a cash-back card, you can combine your earnings with points from your Chase Sapphire Preferred Card, Chase Sapphire Reserve or Ink Business Preferred Credit Card to get fully transferable Ultimate Rewards points.
- Discover it Cash Back: This card offers 5% cash back on up to $1,500 spent in the fourth quarter of 2021 with Amazon.com, Walmart.com and Target.com (once you activate) (then 1% cash back).
- Marriott Bonvoy Brilliant™ American Express® Card: Through the end of the year, you can earn 10 points per dollar (up to 50,000 bonus points) when you check out with PayPal.
The information for the Discover it Cash Back 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 is required for select benefits.
Avoid store cards
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. So, store 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 online shopping strategies
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 our 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. In some cases, you can even 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
- JetBlue TrueBlue 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.
Check for targeted card offers
Depending on your card, you may have some enticing offers and discounts on purchases you would likely make this holiday season.
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. By combining Amex Offers with earnings from online shopping portals, you can receive some impressive discounts on your holiday shopping.
If you’ve got a Chase card in your wallet, check out the Chase offers on your online account and add the promotions that appeal to you. You can check the different offers available if you have multiple Chase credit cards.
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 — especially if you aren’t traveling this holiday season. 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 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. That said, there are often promotions where you can save up to $40 when using points.
Chase Ultimate Rewards points
Chase Ultimate Rewards points are worth two cents each, according to TPG 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, at the time of writing, there are about a couple dozen different gift card options that offer you 10% more value, including The Home Depot, DoorDash, Bath and Body Works, Adidas and Barnes & Noble Booksellers. For these cards, you’d get a value of 1.1 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 a statement credit. This feature is available on all Ultimate Rewards-earning cards and allows you to redeem points for as much as 1.5 cents apiece to offset eligible purchases. Here are the current Chase Pay Yourself Back options:
|Card||Redemption value||Categories||Current end date|
|Chase Freedom Flex, Chase Freedom Unlimited||1.25 cents per point||Select charities||Dec. 31, 2021|
|Chase Sapphire Preferred Card||1.25 cent per point||Airbnb and Away (through awaytravel.com) and select charities||March 31, 2022|
|Chase Sapphire Reserve||1.5 cents per point||Airbnb and Away (through awaytravel.com), dining at restaurants (including takeout and eligible delivery services) and select charities||March 31, 2022|
|Ink Business Preferred Credit Card||1.25 cents per point||Shipping, internet, cable and phone services and charitable contributions.
New categories will also include advertising purchases made with social media sites and search engines.
|Dec. 31, 2021|
|Ink Business Cash Credit Card and Ink Business Unlimited Credit Card||1.1 cents per point||Internet, cable and phone services||Dec. 31, 2021|
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. Alternatively, you can get up to 1 cent per point when redeeming toward cash back, depending on what card you have. 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 or most gift cards. Or, you can redeem miles to Shop with Amazon or through Paypal at a rate of 0.8 cents per mile.
However, TPG’s most recent valuations peg the value of Capital One miles at 1.85 cents each. So, you’ll generally be much 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 valuable gift.
Airline and hotel programs
Although some were suspended due to the pandemic, many airline and hotel loyalty programs once again 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. Alternatively, gifting points may also be a good option.
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.
Consider booking trips for others as a gift
Keep in mind that most (but not all) loyalty programs let you 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. Plus, you’ll get the same value from your points that you would when booking a trip for yourself.
So if you’re flush with points and miles, consider booking your college-aged cousin their next round-trip ticket home from school – or treat your parents to their first international business-class ticket. Whatever it may be, you’re giving the gift of travel to those who may not have the resources to do it on their own.
To do this, just book an award trip as normal and simply add the gift recipient’s name and information on the check-out screen. They can then check in for their flight and take off — even if you’re not accompanying them on the trip.
Related: How to give the gift of travel
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. So, consider booking your loved one a trip this holiday season, or paying for gifts and maximizing your return with the perks outlined here.
Additional reporting by Chris Dong, Jason Steele, Katie Genter and Liz Hund.
For rates and fees of the Amex Platinum Card, please click here.
Featured image by Marko Geber/Getty Images.
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