Cash in your cash back

Everyone could use a little extra money during the holiday shopping season. But if you’ve got a cash back credit card, it’s time to get paid. Some cards pay out your cash back earned every November, so you might be getting a cheque soon. That said, some cards also require you to request a payout, so don’t delay if you need some extra funds.

It’s also worth thinking about where you buy your holiday gifts from and what credit cards you have. For example, let’s say you have a credit card that gives you an increased earn rate at grocery stores. Well, if you went to a grocery store that sells merchandise, toys, or gift cards, you could take advantage of those supercharged points. The same applies to other retailers: think about how to supercharge your earnings at stores like Amazon, The Bay, Canadian Tire, Shoppers Drug Mart, Sephora, and popular online shopping retailers.

More: The best cash back credit cards in Canada

Sign up for a new credit card before you shop

Depending on how much you plan on spending this holiday season, it might make sense to get a new credit card before you start holiday shopping. Many credit cards come with a very generous welcome bonus that immediately puts money or points back in your pocket.

It’s a good idea to browse the best travel credit cards list to see the current offers. Quite often, the welcome bonus requires you to spend a few thousand dollars. So your holiday shopping will help you naturally meet the spend requirement. Those points can then be used later for a dream trip for yourself.

You’ll also want to look at the current cash back credit card offers as many of them give you an increased earn rate for the first three months. You could get anywhere from 6% – 15% back on all purchases. There is a cap on those offers, but it’s extra money for you.

More: The best credit card welcome deals and promos

Use your points for merchandise

If you’re short on cash but rich in points, consider putting them towards redeeming merchandise. Just about every loyalty program, including Scotia Rewards and TD Rewards, has a huge merchandise catalogue with high-quality products to choose from. This would allow you to do all of your holiday shopping without having to spend any actual money.

While using your points for merchandise is a good strategy, remember that merchandise redemptions typically have a lower value than redeeming travel. If you’re going to go this route, try only to claim items that have a good value. Some programs even offer a decent value on gift cards, so that’s something worth considering.

Use your points as a statement credit

Instead of being bound by the merchandise available through your loyalty program store, you can also use your points on any purchase you make. Many loyalty programs allow you to redeem your points as a statement credit. That’s instant savings.

That said, statement credits are similar to merchandise redemptions in that the value you’ll get from this option is often lower than redeeming travel rewards. In fact, statement credits typically have the lowest redemption value so you may want to avoid them altogether.

However, there is one exception to this rule. American Express Membership Rewards recently changed the value of their statement credits. It now takes 1,000 points to get a $10 statement credit. That’s the same value as regular travel redemptions, so you’re not losing any value if you decide to claim a statement credit.

Look for additional promotions

There’s been a recent trend with credit card providers where they’ll give cardholders (new and old) extra perks. For example, multiple credit cards offered increased earn rates on select merchant categories. It’s worth keeping an eye on your credit card providers’ promotions as you might be able to get more points or cash back during the holiday spending season.

Once again, a good example is American Express. They frequently have offers for their cardmembers where you can save big. They’ve had offers on multiple occasions where if you spent $200 at select merchants, you’d get $40. That’s basically 20% off.

Don’t forget about any loyalty program promotions. Many loyalty programs will have sales on gift cards or merchandise during the holidays. That means you’ll be able to redeem things for fewer points.

More: How to get the most out of American Express Membership Rewards

Donate your points

The holiday season is a time for giving back, and one easy way to do so is by donating some of your points. Many loyalty programs have charitable partners to which you can transfer your points. While this may not benefit you personally, you’ll be able to use your points towards something good for those in need. Plus, it counts as account activity which would reset the clock on any upcoming expiration date with your points.

The bottom line

The holiday season is a perfect time to earn and redeem your points. Think about how much you’ll spend during the holiday shopping season, where you’ll do your shopping, and what you plan on buying before you do anything. With all of that information in mind, you can use your points and cards to your advantage.

More: How to get the best Boxing Day deals in Canada

Barry Choi Moneywise Contributor

Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.

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