For shoppers still working on their gift list, they should be selective with their payment methods to avoid carrying massive debt into the new year.
If credit cards are your payment choice, make sure to use the card with the best perks and lowest interest rate.
“People should consider whether they are going to pay off those purchases right away or if they are going to carry a balance,” says Erik Larson, president and founder of NextAdvisor.com, on online product comparison tool. “If they are going to pay if off right away they should use a reward card to get some benefits.”
Before your shopping extravaganza, experts advise being realistic about how much you will spend and how and when you will pay it off so you can best determine what card to apply for or use. If you don’t plan on paying off all your holiday debt right away, experts suggest looking for a credit card with 0% interest.
“I recommend a credit card that has no purchase APR for at least six months,” says Anisha Sekar, the vice president of credit and debit products at NerdWallet.com, which compares credit card offers. “You’ll have some time to pay it off and you’re not racking up interest charges.”
Sekar points to the Discover More credit as a good option because she says it offers 18 months interest free on balance transfers and zero percent interest for six months on new purchases. The Discover More card also offers 5% cash back on all online shopping, according to Sekar. Another credit card for those people not planning to pay off the balance right away is the Citi Simplicity card, as Larson at NextAdvisor says it offers 0% introductory APR for 18 months.
If you don’t plan on carrying a balance into 2013, look for a card that offers additional perks beyond 0% interest, like reward points, discounts, cash back and shopping tools.
“Some rewards cards are better than others,” says Larson. “The cards have different cash back rates for different purchase.” One of NextAdvisor’s favorite rewards credit card is the Capital One Cash Reward card that offers 1.5% cash back on all purchases. Another “nice” one, says Larson is the Chase Freedom Card that not only gives consumers 1% cash back on all purchases, but gives 5% cash back on rotating categories every quarter. For instance, this quarter consumers will get 5% cash back on all travel purchases, says Larsen. The Chase Freedom card also has 0% interest for 15 months.
In addition to getting cash back and rewards points, some credit cards will actually shop for lower prices for you. Citi’s Price Rewind program offers price protection on purchases for 30 days. For instance, if you purchase a flat panel TV, Citi will review its price for 30 days and give you the difference if a better price is offered at any retailer as long as the difference is greater than $25.