Published in: Credit Cards | Nov. 29, 2019

3 Reasons to Use a Credit Card for Holiday Purchases

We are committed to full transparency as part of our mission to make the world smarter, happier, & richer. You should know that offers on The Ascent may be from our partners - it's how we make money. That transparency to you is core to our editorial integrity, which isn’t influenced by compensation.

How should you pay for your holiday purchases? There are lots of good reasons it makes sense to use your credit card. 

As the holiday season draws closer, chances are good that you'll be doing some spending. Whether this comes in the form of travel, entertaining, dining out, or gifts for loved ones, you're likely looking at shelling out a good chunk of change.

When you're doing all this holiday spending, consider paying with your credit card rather than other methods such as cash or a debit card. There are lots of good reasons to use your card for the holidays -- with the caveat that you always want to pay off the bill when it comes due before you have to pay interest on holiday purchases.

So why should you use your credit card when you spend this festive season? Here are a few key reasons.

A woman in a yellow sweater holding out a wrapped gift.

Image source: Getty Images

1. You can earn rewards for your spending

The potential to earn credit card rewards is one of the single best reasons for charging purchases on your credit cards. After all, why not earn points, miles, or cash back for spending you have to do anyway?

If you don't already have a good rewards card, consider applying for one before the festive season. Look for a card that is well matched to your spending. If you tend to spend big bucks dining out over the holidays, for example, opt for a rewards card that gives bonuses for restaurant spending. Or if your big expense is your plane ticket to see far-flung family, a travel card would be a better bet. 

The holiday season can be an especially good time to sign up for a new card. Many card issuers make bonus rewards available to new cardholders who hit spending thresholds within the first few months of opening their account. If you plan to buy a lot, your holiday spending could potentially help you to qualify for these hefty bonuses.

2. You may be able to pay off big purchases over a longer time period without paying interest

Ideally, you'll have the money saved to cover all of your holiday expenses this season. Unfortunately, many people don't live in an ideal world and end up going into debt. If you do, and you get stuck paying interest, your holiday spending will cost you a lot more.

If you can qualify for a credit card offering a 0% promotional APR on purchases, you may be able to avoid the additional costs of borrowing. You could use your 0% card to buy what you need and pay no interest charges at all as long as you pay off the balance before the promotional rate expires. This can buy you months more time to come up with the cash for your holiday spending.

Of course, you don't want to find yourself in the same situation next year, so be sure you also budget to begin saving for the holiday season early. That way you'll be able to pay off purchases right away when the first credit card statement comes -- and won't need to open yet another credit card.

3. You may be eligible for added protection on your purchases 

Many credit cards offer extended warranties, purchase protection, or price protection as cardholder perks. If your card does, then you'll definitely want to use it to reduce your risk when paying for costly gifts.

Extended warranties lengthen the manufacturer's warranty, meaning your products are covered for a longer period of time. Purchase protection can cover you if your product breaks or is stolen within a limited time period after you buy it, and price protection reimburses you if a product you buy drops in cost shortly thereafter.

All of these added perks can provide extra assurance that you won't be out of pocket if problems arise with expensive holiday gifts you buy for loved ones -- or for yourself. 

There are plenty of good reasons to use your card for holiday spending

As you can see, there are plenty of good reasons why you should consider using your credit card when you spend on holiday purchases. Just remember to always have a plan to pay off what you owe before interest comes due. Holiday spending is expensive enough and credit card interest could negate the benefits of any rewards you receive.

Our #1 cash back pick has a surprise bonus

This may be the perfect cash back card! That's because it packs in $1,148 of value. Cardholders can earn up to 5% cash back and avoid interest until 2021. With such a deep bench of perks you'll wonder how this card packs in a $0 annual fee. Best yet, you can apply and get a decision in two minutes. Learn more with our in-depth review.

Find the right card for you

Cash Back & Rewards