Five Reasons to Use Your Credit Card This Holiday Season

As the leaves change and the holiday season approaches, it’s the perfect time to start planning your holiday shopping. With fall marking the start of increased spending on travel, gifts, dining and seasonal decor, it’s essential to have a smart financial strategy in place. Learn how using your credit union credit card for your holiday shopping can help you save in the long run.

Points

Unlike debit cards or cash, credit cards can earn rewards points on purchases you make, with opportunities to earn even more in special categories. You can then use those rewards for cash back, gift cards, travel or other experiences, depending on the card. 

Let’s say you have a card that earns you 1.5 points per dollar – spend $1000 in a month, and you’ll earn $180 a year with no effort at all. With all the big spending that comes out around the holidays – from airplane tickets to gift giving – using your card for large purchases means you’ll be racking up points that can be used to pay yourself back. 

This doesn’t mean you should spend more than you normally would just to earn rewards. Only purchase what you can afford to pay off. When you carry a balance on your card, the interest you’ll pay on it may eventually outweigh the value of your rewards. Unlike regular purchases, interest charges on cash advances and balance transfers begin to accrue on the transaction date and can’t be avoided even if you pay off the card in full.

Redeem Rewards for Holiday Spending

If you’ve accumulated points by using your credit card throughout the year, you can redeem them now to help with your holiday budget. This strategy can offset holiday expenses, making your credit card work harder for you.

Perks

In addition to rewards earned, many cards have perks such as roadside assistance, cell phone protection, and extended warranty protection on certain purchases. Read the fine print and find out what you qualify for.

They’re More Secure

If you rely on cash to make purchases, there’s not much you can do if the cash goes missing. However, if your credit card is lost or stolen, you generally will not be held responsible for any fraudulent purchases. The key is to identify suspicious activity before it gets out of control. Many credit cards offer an option to set spending limits and alerts by location and merchant type, so make sure to take advantage of this functionality if your card offers it.

It’s Easier to Track Your Spending

Because your credit card statement lists every vendor where you made a purchase, it’s easier to keep tabs on your spending habits. Additionally, many card issuers automatically categorize purchases according to the merchant.

Credit-Building

If you plan on applying for an auto loan or mortgage, a credit card is a good starter product to begin building your credit. By paying your card’s monthly balance off regularly, you’ll improve your credit score over time. 

Of course, there are a few instances in which using a credit card won’t help you save, such as when the transaction fee for a credit card is higher than the points you’ll earn, or if the purchase is so large (e.g., a wedding), you won’t be able to pay off the debt right away. In this instance, it might be more financially sound to use a personal loan, with a lower APR (Annual Percentage Rate) than your credit card. 

Do your research and find the card that fits your everyday lifestyle. Happy shopping!