Editorial Policy

Where to Find the Best Cash Back Deals for Holiday Shopping

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By Eva Norlyk Smith, Ph.D.
December 10, 2010

Frugal shopping is a high priority for most consumers this holiday shopping season. While credit cards might be the last place most would think of looking for savings, this year they might be worth a closer look.

The number of credit card users is down by 8 million this year, and card issuers are in a fierce competition for cardholder dollars. This is good news both for people applying for new cash back or rewards credit cards as well as for existing cardholders, because many card issuers are sprucing up deals for both. Here is an overview of some of the better cash back deals that card issuers and retailers have rolled out for the holidays:

1. Sign-up Bonuses for Cash Back Credit Cards
If you are in the market to apply for a new credit card, you are in luck. Card issuers currently are one-upping each other with sign-up bonuses on cash back credit cards. For people who apply now, the sign-up bonus could prove helpful in taking some of the bite out of the new year’s credit card bills.

Chase started the trend with a $100 sign-up bonus for the Chase Freedom Card for new cardholders, who spend more than $500 within the first 3 months. The card features a rotating 5 percent cash back bonus in certain purchase categories, and 1 percent cash back on other purchases. For small business owners, the Chase Ink Card also currently offers a $100 cash back bonus as well, issued after new cardholders make their first purchase.

Discover Cards, similarly, has upped the sign-up bonus for new Discover More cardholders to a $100 cash back bonus. New cardholders must spend $500 within the first 3 months to qualify. The Discover More card also features a rotating 5 percent cash back up to a maximum in purchases, usually up to a maximum of $300 to $800 in charges.

More recently, Citi has added a $100 statement for people applying for its Citi Forward Card, who make $500 in purchases within 3 months of account membership. Also, the Citi ThankYou Premier card offers 20,000 bonus ThankYou points for new cardholders who spend $1,000 in purchases within 3 months of account opening. While technically a travel rewards card, points are redeemable for $200 in gift cards and other rewards.

A note of caution: While it is tempting to go to town and see just how many new credit cards Santa is willing to put under your tree, keep in mind that applying for a new credit card too frequently can hurt your credit score.

2. Maximize Cash Back Earnings While Shopping
There are several ways to maximize cash back earnings during your holiday shopping. If you are a fan of cheap chic retailer Target, the Target REDcards now offer 5 percent cash back on everything bought in Targets stores with the exception of prescription drugs and gift cards. Since the 5 percent cash back applies to online purchases at Target.com as well, this can be an easy way to shave 5 percent off holiday expenses.

In addition, for the holidays, Discover More cardholders can sign up online to earn 2 percent cash back bonuses on online purchases up to a maximum of $1,000. Cardholders can also sign up online to earn 5 percent cash back on purchases made at restaurants, department stores and clothing retailers up to a maximum of $300 in charges.

The Chase Freedom card lets cardholders enrolling online earn 5 percent cash back on purchases in grocery stores, department stores, and movies for the last quarter of the year, up to a maximum of $1,500 in charges.

If debit cards are more your style, PerkStreet Financial is currently offering a checking account with an associated Visa debit card giving cardholders 2 percent cash back on almost all purchases. To get the full cash back, debit cardholders must keep a minimum of $5,000 in their checking account, otherwise the cash back earnings is 1 percent. PerkStreet also periodically offers 5 percent cash back in rotating categories, currently on office supply purchases, bus and train tickets, and bakery purchases.

In addition, don’t forget to check for rewards redemption perks on your rewards credit cards. American Express Blue Cash, for example, currently offers Blue Cash cardholders the option to redeem card earnings for gift cards at a lower point rate. For 8,000 points, Blue Cash members can get a $50 all-purpose American Express gift card, a 25 percent boost to the usual 10,000 points needed. Not the greatest redemption value, but still worth it, if cash is your preferred rewards redemption.

Lastly, for real cash back fanatics, online sites like Bigcrumbs.com and Ebates.com feature 3-8 percent cash back deals and higher from thousands of retailers like Home Depot, Barnes & Noble, The Gap, and even Ebay. Cash back earnings for e.g. Bigcrumbs.com are deposited monthly directly into your Paypal account. Of course, with the abundance of attractive cash back options featured on these sites, the trick is to only purchase what you planned, otherwise, earning that cash back, no matter how great, might not be such a great savings after all.