How to Maximize Credit Card Rewards When Holiday Shopping

Hitting the mall to shop for the holidays? Here's how to get the most possible credit card rewards. 

The holiday season is usually a time of increased spending. Since you're probably going to be splurging a bit, why not be smart about your payment method? 

Many credit cards offer generous rewards you can take advantage of and turn your holiday purchases into cash back, miles towards free travel, or points you can use for free merchandise. If you are confident you can use credit responsibly and pay off your credit card in full, these rewards can be quite valuable. Using a card for your holiday purchases could be a smart financial move.

But not all cards are created equal, and there are steps you can take to maximize the rewards you earn, regardless of which card you use. Just follow these four tips to learn how. 

1. Consider signing up for a new card

If you don't already have a great rewards card, the holiday season is the ideal time to sign up for one. Not only can you choose a card that offers extra bonus rewards on the things you're most likely to buy, you could also earn a new cardholder signup bonus. 

These signup bonuses can be generous, but often require you to spend several hundred or even several thousand dollars to earn them, depending on how big the bonus is. Since the holidays tend to be a time of heavy spending, these costs could help you meet the necessary requirements for bonus cash back, rewards, or miles.

Remember, though, that you shouldn't sign up for a new card unless you know your holiday budget and are committed to using the card responsibly. You do not want to take on a bunch of debt you can't pay back because the costs will far exceed the value of even the most generous credit card rewards programs.  

2. Make sure to understand your card's bonus rewards structure

Most credit cards offer bonus rewards for specific kinds of spending. You'll want to know what type of spending each of your cards rewards the most. That way, you can be strategic about which card you use for which purchases.

If you have a card that offers bonus rewards for travel, for example, you should use that one to book your flight to visit family. But if you have a different card that provides its bonus for restaurant spending, reach for that one when dining out.

Cards with the most generous rewards programs often require you to activate quarterly bonus categories. They also often rotate the type of spending which provides the biggest bonuses. If you have one of these cards, pay attention to what type of spending earns you the extra cash back or points each quarter and try to time your purchases to match.

You could book your travel a bit early, for example, if you get a bonus for airline purchases in the months before the holiday season. Also, whatever you do, don't forget to sign into your account and actually activate the bonus rewards. 

3. Be smart about where you shop for gifts

When you have a credit card that offers bonus rewards for certain categories of purchases, you'll want to try to shop for gifts as much as possible in places where you can earn the bonus. For example, many gas stations and grocery stores sell gift cards. 

So if your card rewards you for purchases at gas stations, that's where you should try to buy all your holiday gift cards. Just make sure your credit card offers the bonus rewards for the purchase of gift cards, as not all cards do.

4. When in doubt, opt for gifts that get you the maximum rewards 

If you're not sure what to get for some of the people on your list, try to opt for presents that will net you more rewards for spending. If you get bonus points for dining, for example, then restaurant gift cards could be the way to go. 

Your holiday spending can turn into ample rewards

By following these four tips, you can translate the spending you have to do for the holidays into tons of credit card rewards. If you maximize the rewards you earn, you'll have plenty of cash back, miles, or points that you can use to treat yourself in the new year. Just remember, you should not spend more than you can pay off when the bill arrives; otherwise, the interest you'll owe will negate the value of any rewards you might earn.