Personal Finance

Best ways to earn, redeem rewards points over the holidays

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.

According to the National Retail Federation's 2015 Holiday Consumer Spending Survey , Americans expect to spend an average of $805.65 on holiday gifts, a record in the survey's 14-year history. If you've been hoarding credit card rewards, you might be able to significantly lower your holiday costs by cashing them in.

Even if you don't have a big stash, you'll want to make sure you're maximizing your earning potential on all your holiday credit card purchases. So, how do you get the most from your rewards programs this season?

Take advantage of Cyber Monday. Surveys show most rewards cardholders will skip the trip to the store on Black Friday and instead shop online on Cyber Monday, which is Nov. 30 this year.

If you're planning to pass on the long lines at crack of dawn Friday, check out . It lists more than 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 bonus points for purchases in revolving categories are aimed at holiday spending right now, mainly retail purchases. Now through Dec. 31, Discover is offering a 5 percent bonus on up to $1,500 spent at, department and apparel stores. Chase Freedom cardholders can get up to 10 percent cash back at,, and

Double-dip with discounted gift cards. Gift cards continue to gain popularity among cardholders, accounting for an average 37 percent of reward redemptions in 2015, up from 29 percent in 2013, according to a survey by Capital One.

Discounted gift cards are a great way to give someone more spending power than you're paying for. Chase Freedom, American Express and Discover are among the issuers offering deals on gift cards through the end of the year. For instance, you can use $20 worth of Discover rewards to get a $25 gift card to the Gap, a $30 gift card for Sunglass Hut or a $40 card for Enterprise Rent-A-Car. Discover says it has deals with more than 150 partners, including retailers, gas stations and restaurants, which you can find on the Discover Deals website.

You can even go for a savings trifecta. You take your points, which came free with your card, and use them to buy a discounted gift card, and then use them to buy discounted gifts. For example, 2,250 Chase 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 points."

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 as evreward . 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, you can book a ticket on American Airlines from New York LaGuardia to Los Angeles (departing Dec. 20 and returning on the 28th) worth nearly $700 by spending 50,852 points through Chase's Ultimate Rewards travel portal. That's a much better use of those 50,000 UR points than using them to buy, say, a $500 TV. The same principle holds true for other programs such as American Express Membership Rewards.

Dig up forgotten points. Representatives of American Express and Capital One say the most common mistake cardholders make with rewards is not redeeming them. "Customers often have rewards over various different programs, accumulated from specific promotions or relationships, and they tend to get forgotten," says Daniel Mouadeb, vice president of branded cards at Capital One. "Heading into the holiday season is the perfect time to take advantage of those buried rewards."

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. "It's often easier to use one card this time of year," says Mouadeb, "That way, you can accumulate rewards and make better use of them."

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.

See related:5 things to do now to avoid holiday debtHow to squeeze the last dollar out of gift cardsUnaffiliated travel reward cards give you choices, bonuses

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Credit Cards

Latest Personal Finance Videos

    #TradeTalks: The New Normal of Travel and Trends on the Ground $VAC

    Marriott Vacation Club Global VP of Corporate Affairs Ed Kinney joins Jill Malandrino Nasdaq #TradeTalks to discuss the new normal of travel and trends on the ground. $VAC

    1 day ago