How to Vet Holiday Credit Card Offers

credit card offer

Seen a credit card offer or two in the mail recently? If you have, it could be because credit card issuers step up their game ahead of the holidays, hoping to capitalize on the biggest spending season of the year.

If you’ve been considering getting a new credit card, the holidays are an ideal time to pull the trigger. Here’s what to look at when considering credit card offers for your holiday spending.

Comparing credit card offers for the holidays

Holiday credit card offers often include big bonuses and favorable terms that make them some of the best of the year. The best holiday credit offers can help you stretch your holiday budget further, save on key costs, and keep repayment affordable.

When evaluating a credit card offer, definitely look for opportunities to save on the holiday season ahead. These can come in the form of sign-up bonuses and rewards that you earn as you spend.

But also keep in mind how much you can afford to borrow and focus on keeping costs low. Watch for annual fees and other hidden charges that could cost you, and pay off your credit card immediately to avoid interest costs.

Otherwise, the credit card offer that seemed so great could quickly end up costing you more than you saved.

Your holiday spending plans

The biggest consideration you should make when choosing a credit card is how you plan to use it. If you know what kind of costs you plan to charge to your credit card, you can find holiday credit card offers to match.

If you plan to travel for the holidays, for instance, a travel rewards credit card offer could be a smarter move. Many travel rewards cards have sign-up bonuses that can help you cover holiday airfare, car rentals, or travel costs.

One the other hand, if you’re mostly planning to use your card for holiday shopping, a cash back credit card could save you more. You could earn an extra 1, 2, or even 5 percent back on your holiday purchases.

If you do most of your shopping at a particular retailer, signing up for a store credit card might be beneficial. Amazon’s card offers 5 percent cash back for in-store purchases, for example, and Target’s REDcard also has additional benefits, like an extra 30 days on returns and free shipping.

Be cautious with store-branded credit cards, however — they’re not for everyone. Learn more about store credit cards here.

Credit card sign-up bonuses

If you want a credit card that will help offset your holiday costs, choose one with a big sign-up bonus.

Holiday credit card offers often come with impressive sign-up bonuses or extra rewards that you can earn by meeting certain requirements. Commonly, credit card offers require a certain amount of spending in a given time frame to qualify for the sign-up bonus, which can come in the form of extra points, miles, or cash back.

For instance, the Chase Freedom card offers $150 in cash back for spending $500 in the first three months of holding the card. For holiday travelers, the Capital One Venture card offers a 40,000-point bonus (equal to $400 in travel costs) for new cardholders who spend $3,000 or more in the first three months.

If you do have to spend a certain amount to get the credit card sign-up bonus, make sure you will meet that limit while staying within your holiday budget. Over-borrowing to qualify for a sign-up bonus will leave you starting the New Year burdened by unnecessary debt.

Credit card offer rates

You’ll want to watch the APRs listed on all holiday credit card offers. If you can afford to pay off your credit cards in full each month, this will be less of a concern.

But for those who carry a credit card balance from holiday spending, it takes five months on average to pay off these debts. During that time, interest will add up, costing you more and working against your efforts to pay off your balance.

If you expect to carry a balance into next year, make sure to get a lower-APR credit card. Many credit cards even have a 0% introductory rate for the first few months or year.

Annual credit card fees

The best holiday credit card offers will have no annual fee, or charge a $0 fee for at least the first year. A credit card offer should include information on the annual fee you could be charged.

The Discover it card has no annual fee, for example, and offers 1 percent cash back on all purchases, plus 5 percent cash back on rotating bonus categories (for this holiday season, that includes Amazon, department stores, and Sam’s Club).

Factor this in when choosing a credit card. A higher annual fee could offset savings you’d get from rewards, 0% interest rates, or other benefits. You’ll want to make sure your credit card’s annual fee is actually worth it.

You’ll get a good idea of which credit card offer can help you save the most when you compare the rewards and bonuses of each card, along with the costs you’d pay.

The best holiday credit card offers can help make your holiday season more affordable — that means lower costs and higher savings in the new year.

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Published in Budgeting, Credit Cards, Get Out of Debt