As Americans head to the stores to complete their holiday shopping lists, they will have to choose the best method of payment to complete their purchases. For many, credit cards offer the convenience and security that cannot be matched by cash, checks, or debit cards.
So the question then becomes, which is the best credit card to use for holiday purchases? The answer has to do with how shoppers intend to pay their bills.
Credit cards when carrying a balance
Cardholders who carry a balance should avoid reward cards and be concerned primarily with finding a credit card with the lowest interest rate.
Unfortunately, reward cards will almost always have higher interest rates than non rewards cards. That is just as well, since those who carry a balance should not be tempted to spend more money.
One way to spend less money on holiday purchases is to utilize credit cards with 0% APR promotional financing offers. Cardholders who do not have debt but anticipate carrying a balance can choose a product with interest free financing on new purchases.
Those who already have debt may wish to find a card with a 0% APR balance transfer offer. Keep in mind that these offers tend to require a 3% balance transfer fee on the amount transferred.
Currently, the Slate card from Chase has the only balance transfer offer without a fee.
Also, cardholders must continue to pay their minimum payment, even when not accruing interest.
Credit cards for shoppers who pay their balance in full
The best way to use a credit card for holiday purchases is merely as a method of payment. By paying their balance in full, shoppers can avoid all interest charges and can focus on earning the greatest rewards.
These credit cards can offer points, miles, or cash back rewards for spending. In addition, many cards offer new applicants a generous sign-up bonus that can be worth hundreds of dollars.
[pull_quote align=”left”]The best reward cards for holiday shoppers are those that offer bonuses at the stores you frequent the most. The Blue Cash Preferred card from American Express offers 3% cash back for purchases from department stores.[/pull_quote]The best reward cards for holiday shopping are those that offer bonuses at the stores you frequent the most. For example, the Blue Cash Preferred card from American Express offers 3% cash back for purchases from department stores.
In addition, there are many cards that offer spending bonuses at supermarkets, drug stores, and office supply stores where gift cards are commonly sold.
Another strategy is to use a credit card that offers bonuses for spending at online shopping malls.
Chase has its Ultimate Rewards shopping mall where cardholders can go to earn bonus points on purchases from a wide variety of name brand retailers.
Similarly, Discover has its ShopDiscover online shopping mall where cardholders can earn 5% to 20% cash back from more than 200 retailers.
By examining your spending habits and choosing the right credit card for your needs, you can earn rewards from your spending or save money on interest payments this holiday season.
