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Credit card tips for holiday shopping

November 30, 2011

| Money Rates Columnist

The 2011 holiday shopping season is officially underway. And for many Americans, that means it's also credit card season.

Unless you're among the 6 percent of consumers who still haven't paid off last year's Christmas shopping credit card bills, there is nothing wrong with taking advantage of your top credit cards and making your holiday purchases with plastic. There are a lot of reasons why buying gifts on credit cards makes sense:

  • Many issuers are reducing credit card rates and creating special offers offers to try to draw new applicants. That means there are plenty of seasonal bargains to be had for new balance transfer, cash back and rewards credit cards.
  • Many cards provide extended warranties and other protections when you make a purchase. Under federal law, you have the right to dispute credit card charges and withhold payment while a dispute is settled, which means that if merchandise is defective, you have a right to send it back and deny payment.
  • Stores are expected to carry fewer items in stock, which means you may have to buy more things online, which credit cards are ideal for anyway. And shopping online instead of going to the mall also means you'll save money on gas and eating out.

Getting the best deal with plastic

Whether you choose a 0 percent APR, rewards or a cash back credit card, it's imperative that you know its rules. For instance:

  • Some cards have a 0 percent introductory APR on balance transfers and purchases, but you may have to pay a fee for the privilege -- often 3 - 5 percent of the transferred amount. And with some balance transfer cards, the interest rate will climb perilously high when if you don't pay off your balance during the limited time.
  • Retail store credit cards often have high interest rates and low credit limits. But if you do a lot of household shopping at a place like Target, a Target credit card offering a 5 percent discount could make sense.
  • The holiday season is also a good time to cash in rewards, points and miles to pay for gifts and travel.
  • If you're applying for a new card for the signing bonus, make sure you understand how much you'll have to spend in the first few months to qualify for the bonus. Some cards require a small amount in expenditures, but others might require that you spend more than you normally would.

By keeping on the lookout for deals that fit your spending habits, the holidays can be a good time to opt for a new card. Just make sure you pay attention to the fine print and pay off your balance each month to take full advantage of it.

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