It's challenging to budget during the holidays, what with
shopping, entertaining and family travel on the agenda. No wonder
many of us look to our reward points for a little help.
Gifts are top priority for most people this time of year.
According to Capital One's quarterly Rewards Barometer survey, 59
percent of holiday budgets go for gifts, followed by meals (20
percent). Gift cards are among the most popular redemption options,
along with cash and domestic airline tickets. Travel accounts for
only 11 percent of the average holiday budget, but if you have a
card that earns travel rewards, using them now is a great way to
save some cash for gifts.
So, how do you get the best return on your holiday points?
Take advantage of Cyber Monday.
About 43 percent of rewards cardholders will skip the trip to the
store on Black Friday this year, the survey showed. Thirty-two
percent plan to shop online instead, a third more than last year.
Many retailers offer special discounts on Cyber Monday, which is
Dec. 2 this year.
If you're one of those planning to skip the long lines at crack
of dawn, check out
. It has a listing of 800 online retailers and the limited-time
deals they're offering. You can use that information to gauge
whether it's a better deal to pay outright for an item or use
rewards to purchase it, and if it's the latter, how many points
represent a fair exchange.
Register for revolving categories
. Rewards cards that offer 5 percent discounts for revolving
categories are aimed at holiday spending right now, mainly retail
purchases. Now through Dec. 31,
Cashback is offering a 5 percent bonus in online shopping --
apparel, electronics, toys, gifts -- while
Freedom cardholders can earn 5 percent cash back on up
to $1,500 spent at Amazon.com (including on Amazon Prime
memberships) and department stores such as JC Penney, Macy's and
Sears. Shop through the Ultimate Rewards portal with your Chase
Freedom card and you'll get an extra 5 percent back, for a
potential total of 10 percent cash back.
Double-dip with gift cards
. Discounted gift cards are a great way to give someone more
spending power than you're paying for.
are offering holiday deals of 10 percent to 20 percent off on
select gift cards purchased through their rewards websites, and
Discover promises to increase "or even double" your cash back
rewards with gift cards from more than 150 partners, including
retailers, gas stations and restaurants. Chase Freedom is also
offering deals on gift cards through the end of the year.
If you want to maximize return on your gift card investment,
consider buying discounted gift cards and then using them to buy
gifts. For example, 2,250 Ultimate Rewards points would normally be
worth $22.50 in cash, but if you use them instead to get a $25
Kohl's gift card, you're getting a 10 percent savings. If you then
use that gift card to buy merchandise on a 10 percent-off sale,
you've shaved 20 percent off your purchase price.
Shop through a rewards portal
. The easiest way to get an extra payoff is to remember to start
your online shopping at the portal of your rewards program -- the
site often referred to as "the mall." Shopping through a rewards
portal may not save you money during the holidays, but you can bank
some rewards for later, when you're really tapped out.
The biggest missed opportunity by cardholders, says Jennifer
Roberts, president of affluent and high net worth business at
Chase, is buying directly from online retailers instead of going
through the Ultimate Rewards portal. "When customers shop online
and not through the mall, they're effectively missing out on their
incremental earn," says Roberts. "They may be shopping some of the
merchants we offer and we can see those transactions come through,
but we don't see them coming through our mall. So, a lot of times
they're missing out on up to 10x incremental earn in terms of
Use a third-party tracker.
If you have points and miles spread out over several programs, you
can compare the payoff for a particular purchase with a site such
. Type in the e-commerce site you're about to buy from and it will
show you which rewards programs are offering bonus points for that
retailer. Evreward tracks more than 40,000 rewards and coupons for
more than 10,000 online retailers and services, and allows you to
compare deals at a glance.
Book holiday travel through a rewards portal.
If you are planning to travel during the holidays, travel rewards
often offer the best bang for your point. For example, if you
transfer your Chase Ultimate Rewards points to your United Mileage
Plus account, you could get a round-trip United flight from New
York LaGuardia to Los Angeles for 50,000 points (departing Dec. 20
and returning on the 28
). That same flight costs nearly $800 if you buy it with cash,
making the travel reward a much better deal than if you used those
50,000 points on, say, the $500 TV being offered through Ultimate
The same principle holds true for other programs such as
Dig up forgotten points
. Spokespeople from both American Express and Capital One say the
most common mistake cardholders make with rewards is
redeeming them. "Customers are most likely to remember to use the
rewards on the card they use the most," says Amy Lenander, vice
president of rewards programs at Capital One. "But they probably
have rewards sitting around in places they don't remember that they
can get some utility from at this time of year -- either to buy
gifts or to supplement some of the travel they're doing."
Keep it simple.
Life can get crazy this time of year and some consumers prefer to
avoid the hassle of juggling multiple reward programs. If this
describes you, it might make sense to pick one card and focus your
efforts. "I think it's important for customers to understand which
of their cards gives them the most value all the time," says
Lenander. "If you focus on one card, you're able to build up a
larger pool of rewards that you can then you can use for bigger
purchases, bigger rewards redemptions."
If you opt for simplicity, make sure you have a card that offers
rich rewards on the things you're most likely to spend money on,
and lots of flexibility to use them when and how you want to. Avoid
rewards that expire or come with blackout dates.
Give to charity.
While most of us focus our spending on one main card, we often
leave points stagnating in less-used loyalty programs. What to do
with the about-to-expire 4,000 miles on that airline you rarely
fly? If giving back is one of your priorities this time of year,
you can always donate those points to charity. Most major card
issuers and loyalty programs make that fairly easy to do, with a
minimum donation of 1,000 miles.
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