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How To Pay For Christmas Using Credit Card Rewards


The key to paying for Christmas with credit card rewards is having a budget and making a plan to earn enough rewards to pay for that budget. In 2017, the average consumer planned to spend $906 on gifts according to Statista.

Of course, people working toward financial independence definitely aren’t the average consumer. Instead, you likely work hard to come up with meaningful gifts and find great deals on those gifts. After all, doing so allows you to put more money toward reaching FI.

Instead of the $906 budget, the average consumer planned to spend in 2017, let’s say you have a $500 Christmas gift budget. But even if you can’t pull Christmas off for $500, credit card rewards will still make a huge dent in your holiday budget.

To pay for Christmas with credit card rewards you’ll need to save up your credit card rewards so you actually have them to pay for Christmas gifts. You can allow the rewards to accumulate on your credit card throughout the year or cash them out every few months and deposit them into a targeted savings account to pay for your gift giving.

Here’s how you can earn $500 in credit card rewards.

Option 1: The Citi Double Cash Card

The Citi Double Cash card is one of my favorite credit card rewards programs because it is simple and easy to use. The Citi Double Cash Card essentially offers 2% cash back by offering 1% cash back on all purchases and an additional 1% cash back when you pay for those purchases.

Earning a flat 2% cash back is a pretty awesome deal considering you don’t have to worry about annual fees, rotating categories, cash back limits or any other pitfalls that come with some other rewards or cash back credit cards. You will have to spend $25,000 over the course of a year, or $2,083 per month, on the credit card to earn $500 in cash back. However, for some people that should be relatively easy if you put all possible credit card expenses on the card.

Check out our full review of the Citi Double Cash Card here.

Option 2: Chase Freedom Unlimited

Chase Freedom Unlimited offers 1.5% on all purchases plus a sign-up bonus of $150 if you spend $500 in the first three months of having the card. All for no annual fee.

You’d have to spend $23,333, or $1,944.00  per month, to reach your $500 Christmas gift goal in the first year.

Check out our full review of the Chase Freedom Unlimited here.

Click here to compare cash back cards

Option 3: Capital One® Savor® Cash Rewards Credit Card

If Christmas is just a few weeks away, you won’t have time to spend almost $20,000+ to earn $500 in credit card rewards. Instead, consider a card like the Capital One Savor Cash Rewards Credit Card. It offers a $500 cash back sign up bonus for spending $3,000 on purchases within three months from account opening.

You’ll also earn 4% cash back on dining and entertainment, 2% cash back at grocery stores and 1% cash back on all other purchases. The annual fee is $0 in the first year and $95 each year after that.

If you find out the card isn’t worth the annual fee for you, you can always cancel the card before the annual fee is due in year two. However, if you earn enough cash back to offset the fee, you may want to consider keeping it.

Option 4: Chase Sapphire Preferred Card

Another option to earn a quick $500 cash back is the Chase Sapphire Preferred Card. You can earn 60,000 bonus points worth $600 cash back by spending $4,000 on purchases in the first three months from opening your account. You’ll also earn 2% cash back on dining and travel purchases, as well as, 1% cash back on all other purchases.

The annual fee $95 each year.

One important thing to keep in mind with the Chase Sapphire Preferred Card is that you won’t want to use it for cash back if you have plans to use the travel rewards in the future. The points you earn on this card are very versatile and valuable. That said, if you know you’ll never want to use travel rewards, you can use the points for cash back as mentioned above.

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How To Pay For Christmas Using Credit Card Rewards

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