How to Pay for Thanksgiving With a Cash-back Credit Card

Jane Switzer
by Jane Switzer October 6, 2016 / No Comments

By now, you’ve probably realized that Thanksgiving is the gateway to the spend-heavy holiday season. With your fridge stocked for this weekend’s big family dinner, you might already be wondering how your bank account will survive the next few months. What if you could pay for your Thanksgiving dinner with the returns from a cash-back credit card?

Leading up to the holidays, you could be racking up rewards for your everyday spending on groceries, gas, drugstore items, and even household bills using a card that refunds you a percentage of every dollar you spend.

The turkey is generally the centrepiece—and the biggest cost—of a Thanksgiving meal. For example, using Metro’s flyer for Sept. 29 to Oct. 5, a frozen Butterball turkey costs $1.49/pound. Using Butterball’s handy turkey calculator, the recommended size for 10 guests is 20 pounds, which would cost $29.80. Then there’s all the trimmings: Stuffing, mashed potatoes, vegetables, alcohol, rolls, butter, and dessert. It’s likely to add up to $75 to $100, depending on the numbers of guests.

Even if you aren’t shouldering the entire cost of dinner, you may have to consider host gifts, gas for travelling, plane tickets, or even an early Christmas present or two for long-distance relatives. Here’s how you can start utilizing your everyday spending habits to pay for next year’s holiday festivities:

The SimplyCash Preferred Card from American Express, for example, offers new cardholders 5% cash back on eligible purchases up to $400 for the first six months, 1.5% cash back when the welcome rate ends (up to $100,000 annually) and 1.25% thereafter. The card’s annual fee is $79.

You can find the best credit card for your personal monthly spending profile and compare cards side by side to find the right one for you. Here, we’ll assume a monthly spending budget of $1,400, with $250 spent on groceries, $300 on gas, $150 on restaurants, $300 on bills, $100 on travel, $100 on entertainment, $100 on drugstore purchases, and $100 on everything else.

That’s $453 cash back in your first year for you to use toward a whack of groceries, a bottle of wine and a card for your friend hosting dinner, gas for the trip to your in-laws’ house, Christmas presents, or savings. Even if you spread out your holiday shopping throughout the year, you’ll still get a rebate for money you’re spending anyway.

SimplyCash Preferred Card from American Express

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  • $79 annual fee
  • Earn 5% cash back on all eligible purchases (up to $400 cash back) for the first six months of cardmembership; earn 1.5% cash back when your welcome rate ends (up to $100,000 annually) and 1.25% thereafter
  • No limit to the amount of cash back you can earn

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. Yes, you can earn back a few dollars from those pesky wireless and utility bills, and anything bought in a drugstore: Prescriptions, cosmetics, food, etc. The card’s annual fee is $99, and is waived for new accounts opened before Oct. 31. Using the points calculator and the same budget scenario as above, this card will earn you back $415.

Scotia Momentum Visa Infinite

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  • $99 annual fee (waived for accounts opened by Oct. 31, 2016)
  • 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.

The bottom line with a cash-back credit card is the same as any other type of credit: Only spend what you can afford to pay back. When used strategically, cash-back credit cards can have a decent payoff. And if you end up hosting Thanksgiving dinner again next year, you can relax knowing your yearly spending will be rewarded. Now that’s something to be thankful for.

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Flickr: Tim Sackton