Use Credit Card Rewards to Pay for Christmas!

cash back credit cardThe 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.

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About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. We always cash in our rewards once a year for holiday spending. This year we had almost $1,100 in rewards money!

  2. I’ve save up a lot of rewards for Christmas. I just received around $100 in gift cards and have enough for around $200 more. WOOHOO!

  3. We’ve used rewards in the past and probably will in the future as well. I like being able to use them to get gift cards as gifts.

  4. We save monthly for Christmas so we won’t depend on rewards. We do have a nice healthy rewards balance right now on our main card, so we will probably use it to pay for all those extra meals out that occur when traveling/around holidays!

  5. We definitely paid for some of our Christmas with rewards this year. It was a no brainer! We turned in some of our Citicard rewards for Wal-mart gift cards and bought a multitude of gifts on someone else’s dime!

  6. What card can you use 20 points for a $25 gift card. That is a sweet deal.

  7. The main rewards that we get on our charge card includes travel insurance and many other things really from the bank. We don’t have any cash-back or similar cards. But these are just bribes for you to use the card as your debt expands the bank’s assets. The interest you pay – or rewards you get (some of which comes from the retailer anyway) are just incidental.

    • They key to pulling this off is never paying the bank a dime and never carry debt. If you pay it off in full every month all you get is the rewards.

  8. We use supermarket reward card vouchers towards presents (given that you can buy almost anything in supermarkets these days)!!

  9. Lance, you and I are on the same wave length. I also save up my rewards all year and then cash them in for Christmas. Why not! The gift cards are usually better priced and its extra money that I don’t count on.

  10. Leslie Lalande says:

    Awesome post! I wrote a similar one and how it worked out for me. Christmas cost me less than $100 out of pocket this year, so my saved Christmas budget is being transferred over to my house renovations that are currently underway.

  11. I like to use our CC rewards for fun spending! This Christmas I have cashed out a whole bunch of online reward points from surveys for giftcards, however, which I’m giving as presents.

  12. I use my rewards to redeem for gift cards to give for wedding gifts

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