If you're going to ramp up your shopping for the holidays, you might as well use a credit card that's going to give you big cash-back bonuses you can use for travel or deferred interest that helps you manage big purchases.
On Thursday, CardHub, a credit card comparison website, released its review of more than 1,000 of them, listing the best cards for holiday shopping based on how you shop and whether you're likely to pay off the balance quickly. And this year's offers are better than those from last season, said Jill Gonzalez, spokeswoman for CardHub.
"Just like stores are starting to open earlier on Thanksgiving, card issuers are offering more cash back every year, more discounts every year. They're kind of following suit with what the retailers are doing," she said.
If you expect to rack up at least $3,000 of purchases within the next three months, several cards offer enticing initial rewards bonuses, including the Chase Sapphire Preferred Card, which offers 40,000 bonus points that can be used for $500 in travel or a $400 statement credit. The Capital One Venture Rewards Credit Card and Barclaycard Arrival Plus World Elite MasterCard both also offer 40,000-mile rewards bonuses.
Among cards offered by the major retailers, Kohl's, Macy's and Toys R Us this year have the best limited-time holiday discounts, according to the CardHub report. The retail cards tend to offer 15 percent or 20 percent off the first day's purchase, plus other bonuses such as cash-back incentives or further discounts.
Of course, retailer cards offering great deals for the holidays are less great if a shopper carries over a balance and a high annual percentage rate accumulates on the the balance. "If you know you're going to pay it off in full, it's very lucrative," Gonzalez said. "If you know you're going to be carrying a balance then ... be very careful."
Some cards have penalties that can ultimately make those introductory offers moot, Gonzalez said.
"Make sure to carefully read the fine print of any retailer-affiliated credit card that offers a 0 percent introductory rate. Many of these deals ... have a clause that allows the issuer to retroactively apply interest to your entire purchase amount if you don't pay off your balance in full by the end of the introductory period," the CardHub report warns.
If you're in the market for a new credit card, choose the one that best fits a specific need, Gonzalez said. "We recommend using the 'island approach,' really isolating each card to whatever you use it for," she said.
If you're making a big purchase, like a TV for Christmas, for example, look for something with deferred interest and try to pay it off within the that first 18 months, she said. If you already have credit card debt elsewhere, you may want to look for a new card that has zero-interest for balance transfers for an introductory period.