How to use credit card rewards to avoid holiday debt

Smiling woman with credit card online shopping at her home decorated with holiday cheer, happy that she's using her credit card rewards to help her pay for gifts and avoid holiday debtImage: Smiling woman with credit card online shopping at her home decorated with holiday cheer, happy that she's using her credit card rewards to help her pay for gifts and avoid holiday debt

In a Nutshell

Credit card rewards provide a variety of incentives for consumers — cash back, miles you can redeem toward flights, retail discounts and more. With increased spending during the holidays, it’s the perfect time to take advantage of the credit card rewards you’ve been accumulating throughout the year.
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Between shopping for gifts, traveling to visit family and cooking special dinners, holiday spending can add up.

If you’re worried about how to minimize debt and still enjoy yourself this holiday season, you’re not alone. But with a little bit of planning and the strategic use of credit card rewards, you could minimize holiday debt while maximizing your holiday spending.

Before we talk about ways to maximize savings, let’s recap what credit card rewards are all about.

What are credit card rewards?

Credit card rewards are incentives offered by credit card issuers that are designed to encourage consumers to sign-up for their products and become loyal customers.

Credit card rewards can come in a lot of different forms, but the three most common are:

  1. Cash back credit cards provide a percentage of cash back for each eligible purchase.
  2. Retail credit cards offer points, discounts and/or cash back for specific retail stores.
  3. Travel rewards credit cards allow you to earn miles or points to redeem for things like travel and hotel stays.

“Every business is fighting against each other to gain customers and loyalty,” explains Natasha Rachel Smith, personal finance expert at “To make it more attractive to consumers to use their product, issuers will offer both introductory credit card offers and ongoing offers.”

Due to the increase in expenses, the holidays can be an excellent time to use the credit card rewards and points you’ve been accumulating all year.

Here’s how you can use your credit card rewards to help you avoid holiday debt this season:

  1. Offset your holiday expenses with cash back rewards
  2. Use store loyalty to your benefit with retail rewards
  3. Save on holiday flights with travel rewards

1. Offset your holiday expenses with cash back rewards

Even though it may seem as if cash back credit card rewards don’t offer flexibility for additional savings, there are a few ways to maximize the cash you’ve earned through your credit card.

“It’s helpful to think of your cash back rewards in terms of layers,” Smith says. “The first layer is the cash back you’ve earned, but there are actually additional layers of savings available online.”

Cash back websites are one way you can earn additional cash back. These websites earn money through affiliate links that lead to store websites. The consumers use these links to shop and then the websites share a percentage of their profit with the consumers.

And, as Smith explains, the cash back earned through these sites is in addition to the cash back earned through your credit card rewards. Combined, that means greater cash back opportunity.

While cash back websites or retailer websites can help to maximize your savings, setting a specific budget for each item on your shopping list can help minimize debt.

Instead of setting an overall budget for the holiday season, you might find it helpful to create an itemized list of how much you plan to spend on each item. Not only will this help you stretch your cash back credit card rewards, but it will also help to minimize overspending.

2. Use store loyalty to your benefit with retail rewards

Retail credit cards offer a unique advantage for holiday shopping because they reward shoppers for their loyalty.

Some retail credit cards offer ongoing discounts whenever you shop at the store online or in person. This can be an excellent perk for holiday shopping because it can save both money and time to shop at one store instead of 10.

According to Smith, there is a simple recipe for maximizing your retail credit card rewards: organization, patience and discipline. It’s important to be strategic and make the most of the retail rewards you’ve earned.

“An important tip that many people don’t think to do is to phone up the retailer and ask them what additional promotions they are currently offering. You might have a special promotion on your account that you aren’t even aware of.”

Combine your retail credit card rewards with promotions whenever possible for added savings.

Another way you can “layer” your savings is by using a cash back website to shop at the store and paying with your store credit card. Doing all this could help you stretch your holiday budget even further.

3. Save on holiday flights with travel rewards

More than 103 million Americans were expected to travel during the holidays last year — a number that grows every year. Whether you’re planning to travel across the country or across the world, your travel credit card rewards may be able to help you save on travel costs.

Smith says the best way to take advantage of flexible travel credit card rewards is by using your points to book flights.

“Most travel credit cards that are through big [issuers] like Chase and American Express allow you to transfer your points to partner airlines, and that’s good news because those flights are often cheaper,” she says.

According to Smith, there are a few specific steps you can take: First, choose your destination. Then search for flights with your issuers’s partner airlines online and transfer your points using your credit card rewards portal.

It’s also important to note that issuers sometimes offer their own travel booking portals, so if you don’t find the flight you want with your issuer’s partner airlines, you can search for flights directly in your credit card’s rewards portal.

If you aren’t traveling this season and still want to take advantage of the points you’ve accrued through your travel credit card, there are other options. You can often use your points to buy a gift card as a present through the portal instead.

Bottom line

Holiday budgeting can be stressful, but using credit card rewards can be an easy and strategic way to maximize your holiday spending, reduce stress and minimize holiday debt this season.

Whether you decide to “layer” your savings and potentially save hundreds of dollars, or simply cash out your rewards and use them to buy gift cards as a present, you could end the season with more money in your pocket than you would if you didn’t take advantage of your rewards.

About the author: Taylor Milam-Samuel is a personal finance writer who is passionate about breaking down money barriers. She enjoys helping millennials become intentional about money and spending. Taylor holds a bachelor’s degree in En… Read more.