If you already have excessive credit card debt, using credit to make your holiday gift purchases is likely not in your best interest. On the other hand, if you've been careful with your spending and you want to use credit cards for your purchases- here is how you can benefit most from using credit cards this season.



Determine Your Holiday Budget: And Stick to it Like a Melted Candy Cane!

The reason credit cards have gotten a ?bad name? is because they are misused. People get carried away with the power of accessible cash, and sometimes forget it's money that has to be paid back- or at least they aren't thinking about how much they'll pay for each purchase after the interest has been accounted for!

Determine how much money you can afford to spend on your holiday gift purchases. You want to be able to comfortably pay back the money within a month or two of charging it to your credit card, to keep your interest rates down and to be sure you don't end up with a costly debt that lingers for years.

Use a Cash Back or Rewards Credit Card

One of the best ways to benefit from holiday shopping with credit cards is to use a cash back or rewards credit card. The holidays are typically a time when there is reason to spend more money in a short period of time, and far more than you normally would, which helps you earn more rewards on this type of credit card. Rewards credit cards work by giving back a percentage of your sales as a credit on your statement, or in terms of points that can be used to redeem merchandise, discounted items, airline tickets, hotel discounts or rental cars.

During the holiday season, many credit card companies release special cards with bonus rewards programs. For example, many cards offer higher cash back percentages during the months of November and December- or they may offer double cash back rewards for the first 5 months upon opening your account. These are perfect cards to make the best out of your holiday shopping! It's like saving money on every purchase you make, without having to deal with sales advertisements or coupons.

Avoid Peppy Store Clerks Who Offer Store Credit Cards

The holiday season is the perfect time for store cashiers to step up their in-store credit promotions! They'll offer you 10-15% off ?today's purchase? when you open a store credit card to make the purchase. That sounds great, right? Saving an instant 15% on that day's purchase.

Unfortunately, almost all department store credit cards feature extremely high interest rates. While you may save 15% on your $100 purchase, the interest you'll be charged could be as high as 25%- so if you don't pay the bill off in it's entirely the moment it arrives in your mailbox, you end up spending over the 15% savings in interest fees! When you are offered a discount for opening a store credit card, ask what the interest rate is. If it's higher than the discount, just skip it and use your rewards credit card or pay using cash- that way you know you've saved the high interest, as well as an inquiry to your credit report and an additional line of credit that can lower your credit score (even if you make all your payments on time!)