The holiday shopping season is right around the corner, and some say leave your credit cards at home when you make the trip to the mall. But that can be a short-sighted attitude when you consider that plastic is more than just a convenience, it also provides a form of "consumer insurance" for holiday shopping.
What you can't get using cash
Now’s the time to make sure you’ll be getting the best credit card benefits for shopping this holiday season. If you select the right credit card you can insulate yourself from poor purchase decisions, warranty loopholes, and damage or loss. The exact terms of coverage may vary, but the major providers -- American Express, Discover, MasterCard and Visa -- all offer some form of protection for you. They cover:
- Return protection: If you aren’t able to return a purchase, your card may cover the cost of the item.
- Purchase protection: If your purchase is stolen or damaged for a covered reason, you could be reimbursed the cost of the item.
- Warranty extension: Your purchase’s warranty can be extended for up to a year.
- Price protection: If you find a lower price for the same item, you may recover the difference. This is especially convenient for the holiday shopping season, but keep in mind it's only offered by Discover, MasterCard and some Visa cards.
As we said, though, the specific details of the protection that come with a card can differ in as many ways as there are cards. You need to do some research on coverage and usage terms and conditions to determine which card works best for different purchases. To make sure you have a card that provides the best rewards and other benefits, consult our reviews of the best credit cards at MyBankTracker.
One important rule for using your plastic during the holiday shopping season is to pay off any balances. Remember that if you continue to carry a balance on your card, you’ll typically lose the interest-free grace period on any new purchases. So use a balance-free card when you're making your gift purchases.
Types of rewards and benefits
Among the perks that come with these cards are cash rebate offers. You may prefer a rebate card to those that provide awards points redeemable on products and services -- the cost of those benefits may be inflated. But do your research, and pick which card is best for your circumstances.
Along with rewards, consider extra benefits. Many cards, for example, automatically extend the warranty on most products you buy with them for up to a year. Other useful perks include price protection, which reimburses you if you find a lower price for something you bought during the last 30 days; and purchase loss protection, which pays you back if an item you bought with card is stolen or damaged.
Sign up for extra rewards. Many cards offer rebates (or higher rebates) on rotating categories of merchants that change every quarter. For many cards, these extra benefits don't come automatically -- you have to sign up by a deadline. Go to your credit card's website and apply now, so you’ll have the card well before the holidays.
Also inquire about bonus cash. Some card issuers give you extra rebates if you use your card at certain retailers with whom they've made partnership arrangements. And unlike with the bank’s standard rebate program, there’s no limit on the rebates you can earn. But usually you have to buy through the issuer’s website. If your card issuer has such a program, there's another reminder candidate to be noted and taped to your card so you don’t forget.
Another important holiday season benefit is rental car insurance, which covers you if that car you rented got damaged while you were driving to the relatives' for dinner or to the shopping mall. Be sure to check the fine print on these benefits to find out their limitations and requirements.
Other plastic solutions
Don't forget the spirit of the season by neglecting others in need. Many forms of plastic let you contribute points for worthy causes. You can make an impact with reward points donated to natural disaster relief efforts online. You can also make donations to a host other charities, and in most cases, the giving is tax deductible as well.
If for some reason standard plastic doesn't work for you, another option may to be to apply for retailer credit cards for the stores you shop at frequently. These have a bad rep for their high fees and inflexibility, but some also provide better benefits than you can get with your credit cards.
For example, the Target credit card provides an immediate 5 percent back on purchases at Target. And Target card customers get free shipping at Target.com and 30 days added to the retailer's return policy. Plenty of other retailers -- Kohl's department stores for example -- offer immediate and ongoing combinations of percentage discounts and in-store cash, generous return policies, and other benefits.
According to a recent Capital One rewards survey, 25 percent of reward cardholders said they planned to use their cash rewards from holiday shopping to offset holiday expenses. Another 25 percent said they planned to use their rewards toward spring or summer travel next year, and 44 percent planned to redeem rewards for gift cards. These are consumers sold on credit card benefits for shopping this holiday season.