Tips for Getting the Most Out of Your Credit Card this Holiday Season

December 4, 2013
Holiday Shopping

The holidays are upon us again, and for most of us this is a time of year for giving gifts and having celebrations with friends and family. Amid all the celebrations, we're usually pulling out our wallets to buy something. Whether it's buying the ingredients for a fantastic holiday cookie spread, buying stocking stuffers or making a holiday donation, you're probably pulling out your credit card to pay for it.

While credit cards make payments convenient, the fact that they're easy to use may also make the January bills a little more difficult to swallow. To prevent some sticker shock when those bills arrive, here are some tips to help you save some dough this holiday season.

myFico, the consumer division of the credit risk firm FICO, has some simple advice that sounds like common sense but is easy to forget: Don't charge more than you can pay off. It's easy to get wrapped up in the spirit of gift giving, but if you can't pay your bills off right away, that holiday spirit will also cause you some strain. Not only will you need to pay interest on your purchases, but it could also affect your financial profile.

Other tips from myFico include paying bills before you hit the road for holiday travel. That way you can have peace of mind that you've remembered to pay them on time, preventing late fees. It also recommends resisting the temptation to open up new charge accounts, particularly store credit cards, for an instant discount. Store cards tend to have higher interest rates than standard credit cards, so if you carry a balance, the interest you pay will quickly wipe out those savings.

Consumer Reports reminds consumers to max out their holiday bonus offers. If you have a credit card that offers cash back, it may have special bonus cash back offers for a certain period of time. Cards like Discover and Chase Freedom have these promotions, where certain categories of spending will incur extra rewards. The catch is that you have to sign up for the offer to make sure you get the deal.

You can also get bonus cash back for shopping through a credit card's e-shopping web portal. Citi's Bonus Cash Center allows cardholders to earn an average of five percent and up to ten percent cash back for shopping online at different retailers. Discover has a similar program with its ShopDiscover portal where you can earn anywhere from five to twenty percent in cashback bonus rewards.

Finally, MasterCard has started a new service called Free Shipping by MasterCard where shoppers in the U.S. can get free two-day shipping for six months when they shop online at Best Buy, QVC, Macy's, Kohl's or Wal-Mart and pay for their purchases with a MasterCard credit or debit card. To take advantage of this offer, you have to go to these stores through the Free Shipping by MasterCard website to make your purchase. Once you receive the confirmation showing the two-day shipping charge and payment with a MasterCard, you e-mail that to Free Shipping by MasterCard and you'll receive a $20 statement credit. The program offers a maximum of $500 in savings. A premium subscription, which costs $69 annually, offers free shipping for more merchants and an annual maximum of $1,500 in shipping credits.

"We know that free shipping is something shoppers are looking for during the holiday season and in partnering with Clarus Marketing we were able to deliver a program that provides free two-day shipping at the top ecommerce merchants where consumers are shopping," said Anant Nambiar, MasterCard SVP, Global Consumer Product Development, in a statement. "Shoppers get a great added value benefit and another opportunity to simplify the holiday gifting experience giving them more time to enjoy what matters most."

So this holiday season, be sure to take advantage of the benefits your credit cards may offer, but be careful not to go overboard and hurt your own credit rating.

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