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Do's and Don'ts of Using Rewards Points for Holiday Shopping

The holidays will be here before you know it, and the stores are already prepping for the shopping rush. It’s easy to let yourself get carried away when you’re buying gifts for all of the people on your list, but you can potentially save some money by using your credit card rewards to foot some of the bill. If parting with less of your hard-earned cash this holiday season is music to your ears, then here are some tips for wisely using all those points or miles you’ve racked up.

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Do Understand Your Rewards Structure

Having a rewards credit card in your wallet won’t do you much good if you don’t understand how it works. Before you hit the mall or start browsing online, you want to be clear about what kind of rewards your card earns and how they can be redeemed.

For example, you may be thinking that you can only use your airline miles for flights or that you can only redeem your cash back in the form of a check or statement credit. In reality, your card issuer may allow you to trade miles, points or cash back for merchandise, gift cards or even concert tickets, so it pays to take a closer look at your rewards structure.

Do Check out the Rewards Store

Many credit card companies make shopping with your rewards easier by offering an online marketplace where you can swap out points, cash back or miles for the things you want with just the click of a button.

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Chase cardholders, for example, can log in to the Ultimate Rewards store to view what items are available and redeem their points. Citi members can shop online for things like kitchen appliances, tools and clothing using their ThankYou points. You can save even more by taking advantage of exclusive discounts available only through the rewards store.

Do Keep Track of Your Redemptions

If you’ve got a lot of people to shop for or you’re cashing in rewards from several different cards, it’s easy to lose track of how many points or miles you’ve used up. You could be in for a nasty surprise if you go to complete a purchase and find out that you don’t have any rewards left.

Fortunately, there are apps like AwardWallet that help you keep tabs on what you’ve earned and what your remaining rewards balance is. The app will also alert you if any of your points or miles are about to expire, so you’ll never have to worry about them going to waste.

Don’t Shop Without a Plan

Blowing through your rewards willy-nilly is definitely not something you want to do, especially if you’re trying to save money on big-ticket items this year. Making a list of everyone you’re shopping for and what you want to get can keep you from using up your points or miles too quickly.

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If you’re planning to use your card to charge some of your holiday expenses, you should also be paying attention to where you can earn the most rewards. For instance, if you’ve got a card that pays 5 percent cash back at grocery stores, that’s a great opportunity to stock up on gift cards at a discount.

Don’t Chase After Rewards

One of the biggest mistakes you can make with your rewards card is overspending just to get more bonuses. Not only will you blow your budget, but once the new year arrives, you’re going to have one heck of a debt hangover. If you can’t pay the balance off right away, everything you bought is going to cost that much more through the amount of interest you’ll have to cough up.

Don’t Shortchange Yourself

Finally, you want to make sure that you’re getting the most mileage possible out of every point you redeem. Running the numbers before you cash them in can tell you if what you’re swapping them out for is worth it.

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For instance, if you’ve got 10,000 points that you’re planning to trade in for $100 in gift cards, you’re getting a 1-percent value per point, which is pretty good. On the other hand, if you have to part with 20,000 points for the same deal, it suddenly becomes a lot less attractive. Taking the time to break down each point’s value is the best way to get the most bang for your buck.

Photo credit: flickr

Rebecca Lake Rebecca Lake has been writing about the nuts and bolts of personal finance for nearly a decade. She is an expert in investing, retirement and home buying topics. Her work has been featured on The Huffington Post, Business Insider, CBS News, U.S. News & World Report and Investopedia. As a homeschooling mom of two, she's always looking for ways to make the most of every dollar.
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