The holidays can be a very expensive time of year depending on your gift giving tendencies and how much you celebrate the holiday festivities. Luckily I’m going to share a unique way to pay for your Christmas this year that is a bit out of the box.
Use Credit Card Rewards
Using credit card rewards isn’t something that many people think of but it can be a very effective way to pay for Christmas. I personally rack up cash back rewards all year long and normally only cash out when I see a big reward or cash back balance sitting on my credit card statement. You can get some great stocking stuffers and presents using the money you receive back from rewards cards.
If you save up your cash rewards from your credit card all year it is quite possible you’ll have a few hundred dollars in rewards or cash back waiting to be cashed out. This could definitely help out when your budget is tight around the holidays. You can often use your cash back or rewards points as a direct statement credit to offset some of your Christmas spending.
Another method would be to exchange your rewards or cash back points for gift cards. Some credit cards will actually give you a discount and let you exchange $20 of points for a $25 gift card! This is a great way to maximize your points if you were going to spend money at this retailer for some of your Christmas shopping or want to give a gift card as a gift.
If you don’t have any rewards or cash back points to spend this year don’t worry. There is always next year to prepare for.
How to Prepare for Next Year’s Holiday Season
The first and most important thing to do if you want to use credit card rewards to pay for the holiday season next year is don’t cash out your points before the holiday season! If you’re constantly cashing out small amounts you won’t have enough to cover your holiday spending.
The next thing to do is to make sure you have the best cash back or rewards credit cards for your spending situation. Two particularly great cards for anyone who shops at stand-alone supermarkets is the Blue Cash Preferred® Card from American Express or Blue Cash Everyday® Card from American Express because they give 6% and 3% cash back, respectively, when you shop at stand-alone supermarkets (subject to certain limits). I recently compared the two credit cards to see which offers the most value given your situation so make sure to check it out.
Some credit cards have rotating categories for the highest reward percentages, much like a Discover card does with its 5% cash back categories. Whenever you make a purchase make sure you are putting it on the credit card with the highest payout percentage in order to maximize your future holiday dollars.
If you don’t think it is possible make sure to check back in a couple weeks when I reveal how much cash back I earned from credit cards this year. You just might be surprised!
This Method is Not For Everyone
If you have credit card debt or just plain know that you can’t handle having credit cards I do not suggest you use this method. In addition, you must pay your credit card balance off in full every month and never incur a late fee. If you do not follow these rules for using your credit card your credit card cash back and rewards strategy may end up costing you more than the rewards you earned.