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Want to give your loved ones gifts they’ll appreciate this year without paying cash? Why not put those credit card rewards to use!
Holiday shoppers this year will spend $804.42 on average in 2014, up from $767 last year, according to the National Retail Federation. If you are looking for a way to reduce your holiday bills while taking advantage of all of those rewards you have saved up, this guide will help you maximize your rewards and help you get gifts for everyone on your list.
Important Note: If you are looking to get the most value out of your points, we highly recommend redeeming them for gift cards. With gift cards, you are usually able to redeem your points and get an additional 5 – 20% bonus.
Also, while you’re doing your shopping this holiday season, don’t forget to check for special cash-back opportunities with your credit card and be sure to shop online through your card’s rewards portal, if available.
For example, if you shop through Discover’s shopping portal this month you can get up to 25% bonus cash back (5% cash back for shopping online as part of the rotating rewards categories and up to a 20% bonus with ShopDiscover!).
Great Gifts You Can Buy with Credit Card Rewards
So, what kind of gifts can you get with your card rewards? Here are some of our favorites.
1. Gift Cards – Best Value For Your Points
Who doesn’t love receiving gift cards? While this gift idea is often criticized as impersonal, it’s also the most requested gift. That’s pretty convenient as most credit card rewards programs allow you to stock up on gift cards during the holiday season.
If you have a Discover card, now is the time to take advantage of discounted gift cards through their Cashback Bonus program with $50 gift cards starting at only $40 in points.
Bank of America also allows you to redeem rewards for gift cards, but the deals are usually the worst. For example, You need 3,250 points to redeem for a $25 gift card. Do not settle for less than a 1:1 ratio!
2. Unique Experiences
Want to give your loved one a gift they’ll never forget? Try using your rewards points to get them a one-of-a-kind experience and a holiday season they’ll never forget. Chase has some of the best reward experiences, including tickets for the Radio City Christmas Spectacular (one of my personal favorites). For the 2014 holiday season, you can also redeem your points for experiences like VIP access to events, private lessons and wine tastings.
Visa offers rewards like the opportunity to meet singers or NFL draftees. Some of these rewards are really gifts that can’t be purchased anywhere, so look for something your loved one will really enjoy.
3. Redeem for Merchandise Gifts
Before you hit the mall, check out your credit card rewards program and look at the merchandise you can get for your rewards points. Have a music lover? Redeem your points for a new iPod, high-end headphones or an electric guitar.
For the budding photographer, check out the Canon PowerShot through the Chase program. You can redeem rewards points for just about anything, including DVDs, televisions, sporting equipment, golf clubs and even a new set of tools.
The WorldPoints rewards system from Bank of America offers merchandise, but the redemption rate is usually very poor. For example, a Keurig B31 single-cup coffeemaker costs 14,950 points, whereas it sells at most retailers for less than $100. This means your points would be worth just $0.67 each, far less than a full penny value.
Merchandise redemption values are usually pretty low through other rewards programs like Chase Ultimate Rewards, but it is worth checking because you might find a good deal. Just remember to check major retailers like Amazon and Walmart before you redeem your points.
4. The Gift of Travel
If you have plenty of rewards points to spare, consider giving your loved one a travel experience. You can redeem your points for a voucher on an airline to their dream destination or a hotel stay package at a luxury resort. The Hilton HHonors rewards program, for example, offers some great redemption options like cruises, resort stays and even golf vacations.
If you have 60,000 Chase Ultimate Rewards points, meanwhile, you can redeem it for a two-night stay at a Category 7 property, such as the Park Hyatt Sydney. You can get a really high redemption rate of more than 3 cents per point and give a loved one a gift worth nearly $2,000 and an experience they will never forget.
This gift idea is very heart-felt and gives you the opportunity to make their dreams come true.
5. Shop through Amazon
If you know what you want to buy your friends and family and you have found the best price on Amazon, there’s a good chance you can redeem your points directly through Amazon rather than getting Amazon gift cards and shopping that way. Discover, American Express and Chase cardholders have the option of using rewards points to pay for purchases at Amazon.