Top Tips for Holiday Credit Spending

With Black Friday and Cyber Monday approaching, I’d like to share a great article sent to me from BillShrink.com, the free online service that saves people money on everyday bills, has compiled recommendations on the best credit cards for different types of holiday shoppers, coupled with tips on how to how to avoid getting hurt by issuers’ sneaky fine print.

Did you know that the  majority of Americans are going to use their credit cards this holiday season:

• More than half will be shopping online where credit cards are the primary means of payment
• Half of us will use our credit cards for in-store purchases

The temptation to sign up for a retailer’s promotional credit card to score a better deal is high, but what shoppers don’t know is not all cards are equal— many of the promotional interest rates and rewards won’t match the long-term benefits of non-seasonal cards.

Top Tips for Holiday Credit Spending

1.    Resist the Temptation of the 0% Interest Rate: Beware of in-store promotional cards that offer an initial store discount.  An introductory 0% interest rate can quickly leap to over 20% with just one late payment. Also, when you apply for a new card, an inquiry is made to the credit bureau, which may slightly lower your credit score.

2.    Watch Out for Sky-High Interest Rates: Some card rates have gone up more than 20% this year!  With additional consumer protection laws going into effect in February 2010 that will impact issuer’s profits, we’re likely to see unstable variable interest rates continue to rise.  Make sure you have a careful look at the fine print now to see how high those variables can go.

3.    Enjoy Return Policies: Around the holidays, many credit cards offer “return protection” which means your issuer will take back most items that the retailer will no longer accept, up until 90 days of the original purchase. This is great for early shoppers who may want to make returns after a store’s standard 14-30 day return policy expires.

4.   Take Advantage of Post-Holiday Price Adjustments: Surprise! Some credit cards actually have price adjustment policies for 60 days, so if your favorite store slashed prices after the holidays, you could be eligible for a refund of the difference in cost.

5.   Know how much you are spending on your credit card: You’ll save yourself money and a major headache if you make sure you’ve got enough cash in the bank to cover your credit card spending. Go online to get the latest amount in your checking account, and  subtract the amount you spent on your credit cards on those holiday gifts.  This will give you a good sense of whether or not you have enough to pay your bill on time.

Credit Card Recommendations

Shopper #1 – Doesn’t pay off balance each month, fair credit rating, has the occasional late payment

1.    U.S. Bank SKYPASS Visa Secured – As low as 16.99% APR (variable) and balance transfer rates.  $50 annual fee.

2.    Wells Fargo Secured Visa Card – As low as 18.99% APR (variable) and balance transfer rates, $18 annual fee

3.    U.S. Bank Visa Platinum Credit Card – 0% intro APR on balance transfers for 12 mos. As low as 9.99% APT (variable) and balance transfer rates following.  $40 annual fee (first year free)

Shopper #2 – Bravo- you pay off your bill each month, and you want to get rewarded with a few trips this year!

1.    American Express JetBlue – sign-up bonus of 50 pts after first purchase, for purchases at JetBlue, earn 0.01pts per $1 spent, earn up to 0.01pts per $1 spent in bonus categories, earn 0.005 points per $1 spent on all other purchases, no limit on earnings, $40 annual fee, as low as 15.24% APR (variable) and balance transfer rates.

2.   Citi Visa Forward Card – Sign up bonus of 6,000 points after $250 spending within 3 months, earn 5 pts per $1 spent in bonus categories, earn 1 pt per $1 spend on all other purchases, earn up to 75,000/year, no annual fee, as low as 14.24% APR (variable) and balance transfer rates

3.   Bank of America Alaska Airlines Visa Signature – sign up bonus of 20,000 miles, for purchases of Alaska Airlines/Horizon Air, earn 3 miles per $1 spend, earn 1 mile per $1 spent on all other purchases, no limit on earnings, $75 annual fee, as low as 12.74% APR  (variable) and balance transfer rates

Shopper #3 – Bravo – you pay off your bill each month, and you’re looking for some cash back rewards.

1.    Pentagon Federal Credit Union Visa Platinum Cashback Rewards – earn 5% per $1 spent in bonus categories, earn 1.25% per $1 spent on all other purchases, no limit on earnings, no annual fee, 13.99% interest  on purchases, 4.99% interest (fixed) on balance transfers

2.    Bank of America Cash Rewards Visa Signature Card – sign up bonus of $50 after $25 spending within 12 months, earn up to 3% per $1 spent in bonus categories, earn 1% per $1 spent on all other purchases, no limit on earnings, no annual fee, as low as 12.99% APR (variable) and balance transfer rates

3.    Chase Freedom Card – $50 cash back after your first purchase, plus 3% cash back in rotating categories like gas, home improvement and department stores, 0% intro APR (variable), no annual fee