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Are You Earning Money On Your Christmas Shopping?

There are 12 days left until Christmas—is your bank account groaning yet? Canadians planned to spend an average of $1,551 on travel and gifts last year, according to BMO’s 2015 Holiday Outlook, with PwC estimating along similar lines this year that the average American will spend $1,121 ($1,472 CAD) over the holiday season.

With that much money flying out of your account, it makes sense to strategically pay for your holiday-related purchases using a cash-back or rewards credit card to recoup some of your hard-earned dollars.

Besides the fact that credit cards are more secure than debit cards when it comes to fraud and insurance protection, using a debit card to pay for large purchases means you’re throwing away cash-back and points potential. Here are a few savvy ways you can actually earn money back during the spend-heavy holiday season:

Earn cash back

A cash-back credit card is the most straightforward way to earn back a percentage of every dollar from holiday-related spending, whether it’s groceries for a 20-person dinner, gas for driving to visit family, dinner out with friends, or stocking stuffers from the drugstore.

You can find the best credit card for your spending profile by comparing cards side by side. Pay attention to the spending categories offered and the percentage of cash back earned on each. Cash-back cards are handy because you can use them to pay for everyday items throughout the year and then reap the rewards to pay for next year’s Christmas presents.

Card details

  • No annual fee
  • Earn 2% money-back rewards on purchases in two chosen categories
  • 0.5% money-back rewards on all other purchases

The Tangerine Money-Back Credit Card, winner of the 2016 Product of the Year Canada™ from a nationwide survey, offers 2% cash back in two categories of your choice (groceries, gas, entertainment, hotels, drugstore, etc.), with no limit on how much you can earn back. Unlike most cash-back credit cards, rewards are applied to your statement monthly instead of annually, and you can change your bonus categories to suit your needs. If you choose to deposit your cash back rewards deposited into a Tangerine Savings Account, you’ll get a third cash back category earning 2%.

Card details

  • No annual fee
  • 5% cash back on eligible gas, grocery, and restaurant purchases (up to $250 cash back) for the first six months
  • 1.25% on all purchases

The SimplyCash Card from American Express has an introductory offer of 5% cash back all gas, grocery, and restaurant purchases (up to $250) within the first six months. After the welcome rate ends, you’ll earn 1.25% on all purchases, with no limit on the amount of cash back you can earn. You’ll also get insurance coverage and access to 24-hour customer service.

Scotia Momentum Visa Infinite

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  • $99 annual fee (waived for accounts opened by Jan. 31, 2017)
  • Earn 4% cash back on the first $25,000 on eligible grocery and gas purchases per year; earn 1% cash back per dollar thereafter
  • Earn 2% cash back the first $25,000 on drugstore purchases and recurring bills per year; earn 1% cash back per dollar thereafter
  • Earn 1% cash back on everything else

Another card is the Scotia Momentum Visa Infinite, which offers 4% cash back on the first $25,000 spent on groceries and gas per year (1% cash back per dollar thereafter). It also offers 2% cash back on the first $25,000 on drugstore purchases and recurring bills. You’ll earn 1% cash back on everything else. The Visa Infinite program has a number of perks, including a complimentary 24/7 concierge service, plus access to one-of-a-kind winery, restaurant, entertainment, and hotel offers.

Take advantage of bonus offers  

Starting around Thanksgiving, credit card providers begin to prod customers with bonus offers and accelerated earning opportunities as incentives to spend—offering double or triple the points when you make purchases at specific retailers using your credit card, for example. Before you go shopping, do your research to find out what offers are featured, and take advantage of them. Be sure to check your email, snail mail, and message centre in your online or mobile banking platform—some offers might not be heavily advertised.

All of Canada’s Big Five banks (RBC, TD, BMO, CIBC, and Scotiabank) also offer the opportunity to redeem rewards points for gift cards, which you can either give as presents or use toward your holiday shopping.

Pay off your credit card using cash back or points

Generally, cash-back rewards are paid annually and applied as a credit directly to your credit card balance (except for Tangerine’s Money-Back Credit Card, which pays monthly). If that annual payday happens to fall in December or January, consider it a mini present to yourself to ease the pain of your first credit card bill of 2017.

Even if your cash-back rewards are doled out in the middle of the summer (or spring, or fall), you can think of maximizing the cash back or rewards points you earn through your holiday spending as a future Christmas present for yourself. Bonus: by the time you receive your annual reward, you’ll probably have forgotten about all the strategic shopping you did back in December.

If you have an RBC Rewards credit card, you can also redeem points toward paying off your credit card balance through the Payback With Points program.

The bottom line

Remember, cash-back and rewards programs are only valuable if you pay off your balance in full every month. By shopping strategically and taking advantage of seasonal credit card bonus offers, you can essentially receive a rebate on your holiday shopping.

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