As long as you stick to a holiday budget (and pay off your statement balance in full), the right cashback rewards credit card can be very lucrative. You don’t need to spend extra, either; by optimizing which cards you use for which purchases, you can maximize your rewards on the things you’re already buying anyway.
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What to Look For
So, what are the best features to look for when it comes to the ideal gift-buying credit card?
The first, and most valuable, is that the card earns great rewards. Specifically, you may want to opt for a card that offers cash back, versus choosing a travel rewards card. That’s because cashback rewards are typically more versatile and easier to redeem.
Of course, this depends on how you plan to spend your rewards. Travel miles could also serve you well, especially if you’re planning a vacation in 2020.
The end goal, though, is to get the maximum amount of rewards possible on gifts you’re already planning to buy. In other words, even if a retail credit card offers great rewards, it won’t do you any good unless you can–or were planning to–pick up some of your gifts from that store already. If you have to force yourself to spend money on additional items or at stores you wouldn’t otherwise patronize, you’re losing in the end.
Besides cash back, there are a few other reasons you may choose one credit card over another this holiday season.
No-Interest Shopping: While we recommend budgeting for the holiday season well before you ever begin shopping, a good credit card can help if you’re still going to come up short. Some of the cards we will highlight here feature 0% introductory APRs.
So if you need to spend a bit more than you’ve got banked, or you have an unexpected expense that wrecks your Christmas budget, you’re safe. You’ll have at least a couple of months to pay back those purchases before you incur any finance charges.
Purchase Protections: Other benefits to consider include protections offered by a particular credit card issuer.
For instance, some cards offer return protection, crediting you back for a purchase even if the retailer won’t accept your return. Others offer purchase protection, which will cover replacement costs if the gift is stolen or damaged.
If you’re planning any large purchases of electronics, big toys, or other warrantied items, look for a card that offers an extended warranty protection. In many cases, this gives you the opportunity to double the manufacturer’s included warranty for no additional expense, up to a few extra years.
Of course, these offers are all detailed and complex, and unique to each card product. So if you’re choosing a specific card for one of these benefits, make sure to read the fine print.
Best Cards to Use
With those parameters in mind, here are our top 6 cashback credit cards to use this holiday season.
1. Chase Freedom
The Chase Freedom is our top pick for holiday shopping. It offers:
- An introductory 0% APR on both purchases and balance transfers for 15 months
- 5% cash back on categories that rotate quarterly (Chase typically includes Amazon.com, PayPal, and/or Chase Pay purchases in the 5% cash back category for the 4th quarter.)
- a $150 cash-back bonus when you spend $500 on purchases within three months of opening this card
Other benefits of the Chase Freedom card include purchase protection–up to $500 per claim to cover purchases from damage or theft for 120 days after purchase–and extended warranty protection (on eligible warranties of three years or less).
With these additional protections, and the broad bonus spending categories through the end of the year, this is a great option for those who do most of their shopping online or with the Chase Pay feature.
2. Discover it® Cash Back
The Discover it® Cash Back cashback credit card isn’t the best everyday rewards card, since it has a relatively low 1% cash back on everyday purchases. However, it features 5% cash back on categories that rotate quarterly, and typically includes Amazon.com right around the holidays.
The Discover it® Cash Back card offers:
- No annual fee
- An introductory 0% APR on purchases and balance transfers for the first 14 months
- Cashback Match, which doubles your earned rewards for the whole first year (those 5% categories, including your holiday Amazon purchases, are suddenly earning 10% back!)
- First late fee waived
Other benefits include the ability to freeze your card through a mobile app if you notice any suspicious activity and $0 fraud liability. You’ll also get extended warranties, return protection, and purchase protection on items bought with this card.
3. Blue Cash Preferred® Card from American Express
For excellent cashback benefits, check out the Blue Cash Preferred® Card from American Express. This card is great all year long, offering:
- 6% cash back year-round on up to $6,000 in purchases at supermarkets (Think you can’t buy Christmas gifts at a supermarket? Think again! Many supermarkets carry gifts during the holiday season, and nearly all carry gift cards. You can give the gift cards as a gift, or purchase and use them to buy physical gifts at a 6% discount. Plus, this will come in handy when buying groceries for that special family meal.)
- 3% at U.S. gas stations (perfect for those long drives to visit family)
- 1% cash back on all other purchases
- A $250 bonus when you spend $1,000 in purchases within three months of opening your account
They’ve also recently added a few new bonus categories: 6% cash back on select U.S. streaming services (like Netflix, Hulu, and others) and 3% cash back on ground transportation like taxis and ride-sharing services.
Besides all this, the Blue Cash Preferred® Card offers extended warranty benefits for warranties of five years or less, purchase protection for 120 days from the date of purchase, and return protection for up to $1,000 per calendar year.
4. U.S. Bank Cash+ Visa Signature Card
The U.S. Bank Cash+ Visa Signature Card offers cardholders a choice regarding their cash back. You’ll get:
- A $150 bonus after you apply online and spend $500 online in the first three months
- An introductory 0% APR on balance transfers for 12 months
- 5% cash back on the first $2,000 of combined purchases in any two categories that you choose quarterly
- 2% cash back on one everyday category, like gas or groceries
- 1% cash back on everything else
With no limit on the total cash back you can earn, this is a great everyday use card. And if you’re smart about setting those two bonus categories, you can earn some serious rewards this holiday season.
This card also offers $0 fraud liability, active account monitoring to detect potential fraud, and mobile account alerts. Oh, and no annual fee!
5. Amazon.com Rewards Visa Card
When it comes to earning great rewards for holiday shopping, you may want to think outside the box–especially if you’re one of the 92% of online shoppers who buy from Amazon.
The Amazon.com Rewards Visa Card from Chase offers great rewards such as:
- 3% cash back on all Amazon.com and Whole Foods purchases
- 2% cash back at gas stations, restaurants, and drugstores
- 1% cash back on all other purchases
One benefit of the Amazon.com Visa card is that you don’t have to sign up for rotating bonus categories, as with some of the other cards.
Additionally, you’ll enjoy extended warranty protection (an additional year on eligible warranties of three years or less) and purchase protection against damage or theft for 120 days (up to $500 per claim and $50,000 per account).
If you’re an Amazon junkie, especially for gifts, this is the perfect card to pick up this time of year.
6. Target REDcard
One interesting thing about the Target REDcard is that it comes in two flavors: debit or credit. Both are known as “REDcards” and come with the same perks.
The debit card hooks up to your existing checking account and it automatically debits purchases from the account. So you don’t need to worry about overextending yourself on credit, but you’ll still earn rewards.
The credit card operates like a traditional store credit card with rewards. Rather than getting cash back in the traditional sense, the Target REDcard debit card offers a 5% discount on any purchased from Target. That can add up to big savings throughout the year, especially if you plan to do lots of your holiday shopping at a Target superstore.
Other benefits include free shipping online, additional savings for pharmaceuticals, and an additional 30 days to make returns. Oh, and both options are fee-free.
The Target Mastercard Credit Card offers the same basic benefits, plus a few more. It allows you to make purchases anywhere Mastercard is accepted, for one. Plus, it even offers a handy bill pay service, if you’re looking for that sort of thing.
Get the Most from Your Card Over the Holidays
When it comes to holiday shopping with a credit card, you can earn some serious cash back –if you know how to maximize your spending.
The average American is expected to spend around $930 on holiday gifts, food, and other related purchases this year. By strategically spending with one or more of these rewards credit cards, you could earn some serious rewards. In fact, with 5% cash back categories you’d net $46.50 in rewards.
This year, you can spread holiday cheer while also spending smart and sticking to your budget!