Now that you're starting your holiday shopping, you may be wondering which credit cards will give you the best advantages. To determine that, you first must consider whether you plan to pay them off in full immediately or if you expect to pay them off gradually over the next few months or longer.
If you plan to pay them off immediately, look for cards that offer the best rewards, such as points for additional holiday purchases or travel. Or, if you prefer, you can find cash back deals based on your level of spending.
If you expect to pay off your holiday spending gradually over a period of time, you want to look for cards with 0% interest on purchases for the next 6 to 12 months.
Shop carefully when you look for cards or retail offers with 0% interest. Some are interest-free for a certain period of time – and some are interest-deferred. The interest-deferred cards actually accumulate interest, often at rates as high as 20% to 30%. If you don't pay off the balance before the end of the designated period, you'll be stuck paying all that accumulated interest.
Best Rewards Cards
TrueEarnings Card from Costco and American Express. This card offers the best cash back options (as long as the place accepts American Express). You get 3% cash back on gas, 2% on restaurants and travel and 1% on other purchases. There is no fee for this American Express card, but you must be a Costco member. Also, if you want a little extra time to pay off your Christmas purchases, there is a 0% interest charge on purchases for the first six months after you get the card. Then there's a variable rate, currently 15.24%.
Walmart Credit Card. A MasterCard offered through Synchrony Bank, this card offers up to 1% cash back on any purchase, with a statement credit issued every time you accrue $5. You also save up to 15 cents per gallon of gas at participating Walmart gas stations in the U.S. There's also a $5 rebate for every $500 you charge and special discounts on the first day you buy the card. There's no annual fee, but the variable interest rate is 22.90%.
BankAmericard Travel Rewards Card. You can chose to use your holiday shopping to build up travel credits for your next vacation. This BankAmericard offers 1.5 points for every dollar spent. There is even a 10,000 point bonus if you make at least $500 in purchases in the first 90 days, which is a nice bonus for holiday shopping. To make things even easier for the holidays, the card offers 0% interest for the first 12 billing circles, then the variable fee is 14.99% to 22.99%. There's also no annual fee and no foreign transaction fee (good if you're doing your holiday shopping abroad). Bank of America customers get extra benefits.
0% Interest Options
If you know you won't be able to pay your cards off immediately, look for a card that offers 0% interest on purchases for the first six to 12 months. That way you won't waste money on interest and still be able to buy the gifts you want for Christmas. Two of the rewards cards above – the TrueEarnings Card and the BankAmericard Travel Rewards Card include a 0% interest offer for purchases. In addition to those cards, here are some other options. All are interest-free, not interest-deferred cards.
Chase Slate. This card offers you the longest interest-free period to pay off your purchases – interest free for 15 months (there's also 0% interest on balance transfers for the same period). There's no annual fee, and after the introductory period the variable interest rate is 12.99%, 17.99% or 22.99%, depending on your creditworthiness. You do need an excellent credit history to get this card.
Capital One VentureOne Rewards Card. This card offers you 0% interest on purchases through December 2015, which gives you plenty of time to pay off your holiday shopping before interest starts to accrue. When it does, it will be 11.9% to 19.9%. In addition, you can earn 20,000 reward miles if you spend $1,000 on purchases in the first 90 days. There's no annual fee.
The Bottom Line
These are just a few examples of the deals you can find to make your holiday shopping more convenient, as well as advantageous. You may find others that work better for you at your favorite retailers.
Just make sure you understand the fees and interest rate offers. Many retailers offer interest-deferred rather than interest-free cards. So be careful when you see a 0% offer and make sure it's the most favorable kind.
