Use rewards cards to maximize your holiday shopping

You can turbocharge your holiday shopping with a new rewards credit card as long as you pay off the balance in full every month.

"It's never been a better time to sign up for a new credit card because the bonuses are so lucrative. It's an arms race among issuers and it's not just on high-end rewards cards," said Matt Schulz, senior industry analyst at CreditCards.com.

In fact, six credit card issuers now offer upfront rewards of more than $1,000 to entice creditworthy people to open new accounts. (See chart below.)

To value the bonuses offered by issuers, CreditCard.com assumed an average cardholder would spend $1,325 per month over three years and maximize their points by achieving the cards' spending limits. (See the full methodology here.)

"Credit cards can reduce a good amount of the sting of holiday shopping and travel," said Sean McQuay, a credit card analyst at personal finance website NerdWallet.

One card that has received a lot of attention — the Chase Sapphire Reserve — can be particularly beneficial if you have big holiday travel plans, McQuay said.

You get 100,000 rewards points for signing up for a Chase Sapphire Reserve card if you spend $4,000 on the card in the first three months. The sign-up bonus is worth $1,500 in travel credit if you book through Chase or $1,000 in cash back.

If you meet the rewards criteria, you more than cover the hefty $450 annual fee.

What McQuay likes about the card is that it also comes with a $300 annual travel credit. That means cardholders will automatically receive up to $300 in statement credits to reimburse them for travel-related purchases charged to the card.

For frequent travelers, McQuay recommends they sign up for the card now, use the travel credit for a holiday trip and then have another $300 travel credit available in the new year.

You don't have to be a big spender to earn plenty of rewards, CreditCards.com's Schulz said.

For example, the Citi Double Cash Back card offers 2 percent cash back rewards if you pay off your balance and doesn't levy an annual fee.

"If you are not using a rewards card, you are essentially overpaying by 2 percent," said Shawn Coomer, managing editor of travel and finance website Miles to Memories, who has more than 20 rewards cards and always pays off the balance on them.

Online shoppers can gain an edge this year with Discover cards. The "Discover it" cards provide a 5 percent cash back bonus on purchases at Amazon. That bonus doubles to 10 percent for people who have opened a Discover it within the past year, McQuay said.

Because card issuers want to attract more borrowers, you can find card offers to fit every lifestyle and income level as long as you pay your bills on time, Schulz said.

Just remember that rewards cards are typically not the lowest-rate cards people with good credit can find.

"The biggest mistake consumers make is overspending," Schulz said. "If you carry a balance regularly, a rewards card might not be for you."

More from Holiday Central:
Millennials say they're ready to spend
The real surprise for gamers this holiday season: So much new hardware
Amazon's Black Friday deals start today

If you shop at a big retailer, a clerk will inevitably ask you if want to apply for a store card. Usually, you should pass on that offer.

The average retail card carries a rate of 23.84 percent compared with an average 15.22 percent for all credit cards, according to a CreditCards.com analysis.

That said, Amazon, Costco and Gap have solid store rewards cards that can benefit frequent shoppers of those outlets, NerdWallet's McQuay said.

Try to find rewards cards that offer perks you'll frequently use instead of being lured in by the sign-up bonuses, Coomer said. He uses a simple spreadsheet to track his rewards points in his favorite categories.

"People get stuck using their favorite credit card and don't see what they are missing out on," Coomer said.