With the holidays approaching, a lot of people are wondering about the best way to pay for holiday gifts. That’s one of the reasons banks and credit card companies are sending out credit card offers right now – because they know people are in the market for the best deals available.
With so many holiday credit card offers to choose from, it’s understandable if you’re feeling overwhelmed. At Addition Financial, we want our members to have the tools and information they need to make informed decisions about credit cards.
With that in mind, here’s our advice about how to evaluate holiday credit card offers quickly and easily.
Understand Your Existing Credit Cards
Assuming you already have one or more credit cards to your name, the first step to evaluating holiday credit card offers is understand what you’ve got. That means gathering your existing cards and most recent statements and listing:
- The card name
- The credit limit
- The interest rate
- Your current balance
- Your minimum monthly payment
- Any rewards (points, cash back, miles, etc.)
- Any fine print (for example, is an introductory interest rate due to expire?)
- Any applicable fees (annual fees)
Gathering this information is essential because it’s the only way you’ll know whether a holiday credit card offer is worthy of your consideration.
Read the Fine Print on New Offers
The next step is to read the fine print on any holiday credit card offers you’re considering. It’s common for credit card companies to offer incentives around the holidays. Some examples include:
- Low introductory interest rates
- Zero-interest balance transfers
- Double points (or miles) on holiday purchases
- High credit limits
- Waived fees (including annual fees)
It’s important to understand what they’re offering as well as anything that might mitigate the offer. For example, if they’re offering a low interest rate now that will increase dramatically after six months, you may want to rethink – especially if you’ve got an existing card with a more favorable rate than what they’re offering.
Set a Holiday Spending Budget
Once you’ve got a handle on the offers you’re evaluating and your existing cards, we highly recommend doing some math before you move forward. Why? Because if you have an idea of how much you’re planning to spend this holiday season, you’re in a position to make the most informed decision possible.
To make your holiday budget, you should consider what you can afford and who you’ll be exchanging gifts with. You can trim your budget by suggesting spending caps or a Secret Santa approach. After you’ve done that, you can figure out the total you want to spend and move on to the next step.
Crunch the Numbers
Your budget will help you get down to the nitty gritty with your pending holiday credit card offers and figure out if any of them is worth your while.
Let’s say you’ve set a holiday spending limit of $1,000. You can use that figure to evaluate each offer in practical terms. For example, you might be comparing:
- A rewards card that will offer you $200 cash back if you spend $2,500 or more in the first four months
- A points card that will give you 50,000 points if you spend 3,000 or more in the first three months
- A mileage card that will give you 10,000 miles as a sign-up bonus
It’s going to be impossible to get a true apples-to-apples comparison, but you can use your holiday budget to estimate whether you’ll be able to take advantage of the offers as they are. If you know that you can use your new card to pay for groceries and other essentials and pay it in full each month, you might easily be able to reach a $3,000 limit to earn those points.
Choose the Offer That Gives You the Best Results
The final step is to review your existing cards and new holiday credit card offers and decide which option offers you the best deal. Your individual financial circumstances may mean that you decide a low interest rate is your most important feature – and that may mean you choose a card with less-attractive rewards and a rock-bottom introductory rate. Or, you might be planning a vacation and choose a card with bonus miles as a way of paying for your airfare.
Keep in mind that in some cases, your best bet may be to stick with your existing credit cards. If you’ve got an attractive interest rate on a card that offers you points, cash back or miles, then you may not need to make a change simply for the sake of making one.
Evaluating holiday credit card offers can be confusing, but the simple process we’ve outlined here will help you make the best possible choice for the holiday season – and for your wallet.
At Addition Financial, we offer a wide array of credit cards that include rewards and cash back options with affordable interest rates – and they’re all equipped with one-tap pay capabilities, too! Plus, we are offering bonus reward points when you do some holiday spending at Amazon. Click here to learn more.
Posted on Oct 8, 2019
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