If you tend to carry a balance on your credit card, you can save big time on interest charges with a low interest rate credit card. While some providers occasionally offer a promotional low interest rate for a set period of time, like American Express, some providers outright offer low interest rate cards — with the low interest rate lasting for the life of the card.
With these cards, you’ll typically be able to get a low purchase interest rate of around 8% to 12%. While you’ll still accrue interest on your balance, it’s a good way to avoid excruciatingly high interest rates of 22.99% and higher.
Cash back cards are often the simplest reward cards, offering statement credits or account deposits based on your spending. Cash back amounts typically sit between 1% to as high as 3% of your purchase amount. Cards offering rewards points or miles are more complicated, but potentially more powerful. Many cards offer flexible rewards for redemption towards travel perks, gift cards, merchandise, events and even statement credits.
Get rewarded for holiday groceries: Cards for everyday purchases
Many cards are designed to offer exceptional rewards on food and supplies you purchase at grocery stores or wholesale stores like Costco. You can often earn up to 3% back — a tremendous bonus when you’re the one hosting the holiday party.
What’s more, these everyday cards aren’t just useful for the holiday season — they pay those same dividends throughout the rest of the year too.
Get rewarded for eating out this holiday season: Dining cards
If you plan to treat visiting friends and family to scrumptious feasts outside the home this holiday season, consider a card that rewards you for dining. Look for rewards rates of 2% or higher when you spend at restaurants or sometimes even fast food joints, coffee shops and food trucks too.
As with grocery shopping rewards, dining rewards extend year round.
Save on overseas shopping: Cards with no foreign transaction fees
Whether you’re travelling out of the country for the holidays or you do a lot of online shopping with overseas retailers, a credit card that waives any foreign transaction fees will help keep your spending down. These fees usually sit around 2.5% to 3% of your transaction, and while it doesn’t sound like a lot, it can definitely add up quickly.
If you don’t need all the trimmings this Christmas, consider a practical card with a $0 annual fee. Some no annual fee cards even offer minimal perks like cash back or rewards points, so you may be able to look forward to some free benefits.
These cards are designed to help you consolidate your existing debt, offering an introductory low or 0% APR — typically for 6 to 12 months — on balances you transfer to your new account. At the end of the introductory period, your card reverts to a higher ongoing interest rate that applies to any debt you haven’t yet paid off, so your goal should be to focus on paying down your debt during the intro period and refrain from purchasing more.
Keep in mind these cards usually only apply the intro rate to the transferred amount and any additional purchases you make will incur the purchase interest rate.
Get the most out of your credit card this Christmas by taking advantage of your interest-free grace period. Nearly every credit card offers a grace period — which usually lasts anywhere from 21 to 55 days — on your spending that can give you time to pay off what you owe without putting a cent toward interest fees.
Already have a credit card?
With most credit cards, you qualify for the grace period only if you’ve paid your statement in full the previous month. To take advantage of your grace period for holiday spending, plan to pay off any balance due on your card by November.
After that, use your card to pay for gifts, food and other holiday-related needs throughout December. Those purchases will likely qualify for your card’s interest-free grace period and, after your December billing cycle ends, you’ll have 21 days or more to pay off your new balance before interest starts to accrue.
Learn more about your credit card’s interest-free grace period by reading the terms and conditions of your card. Look for a section like:
Screenshot: American Express
Getting a new credit card for Christmas?
If you’re applying for a new credit card, plan how you’ll use it and ultimately pay off your debt.
To pay off purchases over a longer period of time, look at low interest rate cards. If you’re confident that you can repay what you owe during the interest-free grace period, consider a card that offers miles, points or other rewards for your spending.
By knowing your financial goals and spending habits, you’ll be in a better position to narrow down the perfect card for your needs.
How do I compare credit cards?
When comparing different credit cards, consider the following factors:
Intro APRs. Some credit cards offer an introductory low APR on purchases or balance transfers. Consider how long the intro offer lasts so that you know how long you can wait to repay your debt without paying high interest — or any interest at all.
Interest rates. Confirm each card’s interest rates for purchases, cash advances and introductory offers like balance transfers. Remember that promotional rates will likely expire after a few months and the revert rate will kick in.
Annual fee. Credit card annual fees can cost anywhere from $0 to more than $800 a year. Some providers will reduce or waive your annual fee altogether for the first year.
Signup bonus. Some providers offer enticing bonuses just for signing up for a credit card. These extra rewards miles, points or cash back could add up to hundreds of dollars worth during the holidays — if you qualify. Confirm the offer requirements, as you may need to spend a set amount in the first few months before you receive your bonus.
Earned rewards. When evaluating a rewards card, look at the cash back, points or miles you’ll earn for each dollar spent. Know about any caps on rewards or spending, and browse the provider’s site to learn when and how you can redeem your rewards.
The extras. Complimentary travel insurance coverage, extended warranties, airport lounge access and concierge services can help you get more value from your card. However, think carefully about whether you’ll use them because perks like these usually come at a price — a high annual fee.
Ideas for managing holiday credit card debt
Keep the warm, fuzzy spirit of Christmas alive and well into the new year. Here are some tips to help you stay on top of your spending and keep well within your budget.
Put away your credit cards. Maybe not forever, but perhaps until after you’ve paid off your balances. Avoid adding more purchases to your balance, which will add more interest to the amount you already owe.
Make large payments right away. Paying off as much as you can each month reduces the balance that accrues interest after your interest-free grace period ends.
Find extra money. If your budget is stretched more than you’d like, look for ways to make extra bucks. Sell unused items in your home, rent out a spare room or start a side gig.
Set realistic financial goals that you can reach. It can take only a month or two to land in holiday debt, but it can take years to get out. Create a budget to schedule consistent repayments that can get you back on your feet quicker.
A new credit card can help you get through the holidays and can even reward you for your spending. However, before you apply for a card, consider what you’re looking for — whether that’s cash back, a low-interest rate, no foreign transaction fees, no annual fee or other rewards.
Yes, your credit score will likely decrease by a few points. This temporary drop is often quickly corrected with responsible spending and on-time payments.
It depends on your card provider’s policies. Read the terms and conditions or ask a representative to learn more.
Yes, most come with fees around 2.5% to 3% of the transaction amount. There are only a couple of credit cards in Canada that come with no foreign transaction fees.
Generally, your new card provider will ask for your personal information and the details of your existing debt, either during your application or soon after approval. Once you’re approved for the credit card, your new provider effectively pays off your old ones, transferring the balances to your new card.
While not all balance transfer cards charge a fee, some have transfer fees of 1% to 5% of the total transferred amount. In addition, transfers can take up to 14 days to process.
Kevin Joey Chen is a credit cards, banking and investments writer whose work and analysis have appeared on CNN, U.S. News & World Report, Business.com, Lifehacker and CreditCards.com. He's passionate about helping you get your finances in order by expertly navigating cutting-edge financial tools — including credit cards, apps and budgeting software.
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