The Pandemic has compelled many Americans to use their credit cards for shopping. According to a Bankrate survey, In April 2020, 46% of in-person shoppers paid a credit card, 39% with a debit card. We can predict that the year 2020 will be credit card holiday shopping because Pandemic has created a flurry loss to most workers' income.
Ted Rossman, the industry analyst at CreditCards.com and Bankrate, said in a news release, that many people don't have the available funds to pay right now. So they will finance their holiday shopping with credit cards.
Some credit card issuers note this shift during the Pandemic and are stocking up perks for the holiday season. They adapt rewards credit card benefits to align with spending habits since holiday shopping with credit cards is preferred.
To get the most benefit from these rewards credit cards, you need to have a budget friendly holiday shopping strategies.
In this guide, I will discuss the tips you can follow for under budget holiday shopping. Meanwhile, we will help you to maximize your credit card's perks.
Amazing Benefits of Credit Cards
If you’re already using a credit card to pay for shopping, you can take advantage of some of these updated perks. Here’s what you need to know about rewards cards.
1. You can earn rewards on your spending
Bonuses have become a standard perk of holiday shopping with Credit Cards. Among the best rewards credit cards, you'll find both cards that offer cashback and cards that earn points you can use to purchase anything.
For example, you may be able to make 6 points per $2 instead of 2 points per $2 shopping at a particular store, but only if you go through the retailer's website to the shopping portal.
2. You're at less risk
Online transactions are generally secure from robbery and spams, especially when you're shopping with major retailers.
3. You'll have an easier time
If your order didn't deliver after long, you could take it up with the merchant, but you'll need to discuss the trade. Credit card issuers are proactive about supporting their cardholders for a better quality experience and building brand loyalty.
4. Your credit card may offer protections
Assume you buy a computer from any online store and then see it for 40% off after two weeks. Your cardholder will protect you from that expensive purchase if you have used your Credit card.
These protections include:
1. Price protection
2. Purchase Protection
3. Extended warranty coverage
If you're already using a credit card to pay for shopping, you can take advantage of some updated perks by planning your Budget. But remember! Making a budget plan isn't that hard. Sticking to it is another matter. When you have a long list to buy on a small budget, it often seems impossible to keep your holiday spending within your budget limits.
To avoid this trap, you need to plan for remarkable Budget friendly holiday shopping strategies for maximizing the credit card benefits. Our shopping guide will help you to shop smart.
Budget friendly Holiday Shopping strategies With Credit Cards
Let’s be realistic. Most people depend on credit cards to meet at least some of their holiday obligations. However, if you use credit during the holidays, you need a plan for Budget friendly holiday shopping strategies to depreciate debt and maximize bonuses. Follow specific holiday shopping tips to develop the best strategy:
1. Use a credit card for holiday shopping with a zero balance.
2. Make those purchases interest-free.
3. Distribute cards for a particular part of your holiday shopping plan.
4. Utilize the rewards card that offers bigger bonuses for shopping at certain places accordingly.
5. Only use store credit cards if stores provide rewards.
6. Always pay off the balance in full.
7. Everything else should go on your credit cards holiday shopping with the lowest APR.
Ways to maximize the holiday shopping with credit cards
The season of holiday shopping with Credit Card is already on its fashion. There are chances for which you are looking for every possible way to save a few bucks. With a little know-how and planning, here’s a way you can maximize your credit card’s perks like a pro during holiday shopping.
1. Earn sign-up bonuses
If you sign up for a new Credit card, then holiday shopping can be a great time. Most reward credit cards give valuable points or cashback once you meet a spending requirement during a specified time.
For example, the Chase Sapphire currently offers new customers 60,000 bonus points after spending $4,000 within three months of new account. If this amount of spending isn’t in your average budget, holiday shopping can help reach that amount. There are so many cards you can opt for smooth holiday shopping with credit cards;
Low APR credit card
1. Big-ticket purchases
2. Minimum payments in terms of chunks.
Cashback or Points credit card
1. Limited pay off within one bill cycle.
2. Start with zero balance to free yourself from interest charges.
Rewards credit card
1. Use for reservations and accommodations.
2. Pay off quickly to avoid interest charges.
Store credit cards
1. Avoid usage without time limits.
2. Always pay off store balances quickly.
3. Have the highest APR.
2. Use the Right Card
When you deliver your credit card to the cashier, make sure you have a cashback credit card or a rewards credit card that provides you the best perks for holiday shopping at a specific store. For instance, at Target, your Target RedCard profits you an instantaneous 5% discount on everything you buy, plus free delivery if you shop online. You can avail seasonal credit cards too for more perks.
3. Use Seasonal Credit Cards
Some popular rewards credit cards holiday shopping offer seasonal bonuses during the final three months of the year that can be very valuable. But to take advantage of these offers, you have to go online and register for them.
For example, suppose you have the popular Walmart card with no annual fee. In that case, you should know that your department store, PayPal, and Walmart Pay purchases in October, November, and December of 2020 will receive 5% cash back on the first $1,500 of eligible spending, then 1% after that.
4. Don’t Keep a Balance
Pay-off your credit card balance every month. This can help you to avoid incurring unnecessary interest charges. This way, you can clarify that you can handle your finances and build your credit history.
Ted Rossman, an industry analyst at Creditcards.com points out,
'If you need to carry a balance, you shouldn't be as concerned with rewards.
You need to prioritize your interest rate.'
5. Get Rewards with 0% APR card
If your balance is tight right now and you want to pay off your holiday shopping, consider applying for a credit card having an introductory 0% APR. Using a card with a quintessential 0% APR gives you a short time to pay off holiday shopping without inciting any interest fees.
Usually, the no-interest period endures 12 to 18 months with a few exceptions. After this, you will start paying regular APR on your balance. So choose the best card as you still have to pay the minimum points during the intro period.
6. Use a cashback credit card
'The key to being successful with a credit card that offers cashback is to always pay your bill
in full, on time,'
Said Julian Mark Kheel, director and senior analyst at travel site The Points Guy.
Additionally, he said,
'If you even pay one month's worth of interest,
you've completely wiped out any gains you made
in earning cashback.'
With various Americans encountering financial hardship, some issuers are giving cardholders who can't pay their allegations. Even if you have to carry a balance in the short-term, relief help can manage your credit score.
7. Pay attention to cardholder benefits
'It's best to check with your card issuer to see what help is available,'
Said Benet Wilson, credit cards editor at The Points Guy.
Shopping perks such as protection of purchase, return, and price can be precious this year.
1. Purchase protection policies will cover your qualified purchases against theft and accidental damage for 60 to 90 days.
2. A return policy will offer you a refund if a retailer doesn't accept a return.
3. Price protection policies can offer you a refund of the price variation if an item you bought is advertised for a more economical price within 60 to 90 days of purchase.
4. Using your card's extensive warranty can protect you from declining the expensive optional policies often sold at checkout.
8. Read the fine print
Reward cards can help you save a lot, but sometimes these savings become an expense.
If you are opening a new card, read its fine print. For initiators, rewards card has high annual percentage rates and high yearly fees. Card issuers offer average APR on rewards cards around 15.82% and low-interest rates at an average of 12.79%.
While finalizing the reward card, do a simple myth. If your rewards compensate for the annual fee, then the upfront cost might be worth it. If a high APR and yearly fee cancel out your potential savings, then go for a no-fee card that doesn't offer even a reward.
9. Look for targeted offers
The right way to make a budget for holiday shopping is to take advantage of your credit card issuer's targeted offers. Retailers have 'Offers' pages that show specific recommendations to customers, which they can opt into, and many of these offers are tied explicitly to everyday holiday shopping.
American retailers frequently offer discounts on purchases from select retailers. For example, some American cardholders are receiving offers for an additional point per dollar. You can log-in to your registered account to view the requests and opt-in to the ones you want to take advantage of.
10. Take the benefits of being a Valuable Consumer
Many credit cards come with the benefits of consumer protections. Some Credit cards offer higher fraud liability for starters; other rewards cards also come with perks like extended warranties, purchase protection, and guaranteed returns. Go for trusted retailers like Walmart through trustable portals.
11. Don't forget the shopping portals
The best way to boost the value of the rewards you receive is to use the shopping portals. These websites allow you to earn additional rewards when you go to a merchant website using a link from the portal. The credit card issuer can offer these shopping portals by holiday seasons, black Friday, or a company offering cashback.
There are numerous cashback portals that can make your budget by receiving a commission from the retailers that they steer to their customers.
The thing is, how will you opt for the best one this holiday shopping? The Key is to use one of several portal rewards search engines such as Target and Walmart. These sites will guide you to have the most points or cashback for your shopping at a particular site.
Things to remember!
1. Do not Blow Your Budget
While it's tempting to get into the holiday spirit and start spending to make the season magical, there's no reason to blow your Budget. It is not a good practice to begin the New Year with a new financial struggle to overcome when you have holiday shopping credit card tips.
2. Put everything on rewards
An effective strategy! Remember, retailers predict that the average family spends around $1,000 during holiday shopping.
For example, let's say you put $1,000 on a cashback at 16% APR. You earn 3% cashback on the purchases as the least payment schedule is a standard of 2% of your profit. With 3% cashback, you earn $30 on your holiday shopping with credit cards. The least payment is $20.
However, over $13 of that payment goes to cover accrued monthly interest charges.
So, within three payments (just over 2, actually), you retract your cashback entirely, earning interest charges. This is why you should use Budget Friendly holiday shopping strategies to avoid interest charges.
Pro Tip: Pay it off in one lump sum.
'Don't handicap yourself as you go into the New Year,'
Montanaro, an editor and blog writer of familyceo.com said.
Once the holiday shopping over, recheck your budget. Examine how well you managed to stick to your budget plan if you stayed within your account, congratulations! You’ve figured out your best. If you cross budget but stayed within your total spending limit, that’s a sign you need to squeeze your statement next year to avail credit card benefits.
'It's all about putting yourself in the position to be economically successful.'
The bottom line
Summing up Budget Friendly holiday shopping strategies;
1. Choose a credit card payoff tip to get rid of holiday shopping debt.
2. Start forming a plan to stay within the budget.
For instance, you can start saving all your unexpected change in a jar, and you can also modify your home spending. You can give yourself a generous budget plan to work with this holidays roll around by getting started early.
Ask yourself! Do you have a holiday shopping budget? What other plans do you use to save money on a tight budget?