Moneyland says that consumers are using their credit card rewards cash in mainly three ways this year: to pay down balances on the cards, to save, and to pay for holiday presents. The details:
More customers are redeeming rewards this quarter. And nearly 40 percent of them are turning cash back rewards into statement credits, while another 23 percent are funneling their rewards into a savings account. The other big use for rewards is holiday shopping, with 28 percent of respondents saving their rewards to use toward holiday spending.
Among those using their rewards for holiday-season spending, just under 16 percent say they’ll cash in their rewards for gifts; nearly as many say they’ll spend their rewards on holiday travel. For those using their rewards to buy gifts, gift cards are far and away the most popular gift option; around 55 percent of respondents say they’ll use their points to buy gift cards for holiday presents.
If you really want to boost the amount you can generate to pay for holiday presents, I suggest this:
- Apply now for a new cash back credit card you know you'll want/use over the next year or so. You can find a great list on my post detailing the best cash back credit cards.
- If it works out for you, also get one that has a big sign up bonus (scroll to the end of the "best" link above to see this list).
- Use the card to charge your holiday shopping. This will help you quickly meet the required amounts for the bonus to kick in.
- When you get your bonus (in January), use it to pay off your charges.
Specifically, here are three of the highest bonus cash back credit cards (though one is airline-related only) and here's my list of the best cash back credit cards (many of which have nice bonuses as well.)
Just to clarify, I wouldn't (though some people might) just get a credit card for the bonus, then not use it later (at least I don't think I would -- we'll see what happens with my Chase Sapphire Preferred card). It simply wouldn't be worth the effort for me to get it, use it, cancel it, move to another, etc. However, if you are in the market for a new card and can both get one you'll like/use AND that has a big bonus, why not do so?
Recently, Amazon began allowing customers to make purchases with their Discover Card bonus points. A cool way to buy gifts with "free" money.
Posted by: Diane | November 11, 2011 at 08:45 AM
I just signed up for a card just for the bonus - the first time I've done that. I have to spend $300 to get a $250 bonus gift card. I will be canceling the card soon after as I don't need a new card, and this one has an annual fee that it waived for the first 12 months. My credit is great, and I have no need to apply for a loan or anything anytime soon, so I figured why not?
Posted by: Claire | November 11, 2011 at 12:03 PM