The Worst Holiday Credit Cards
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Here are three fictional cards you definitely don't want this holiday shopping season — and their real-life counterparts that you might want in your wallet instead.
Santa's Sleigh Miles Card
Terms & Conditions — Free flight to anywhere in the world where Santa's sleigh stops. Only good one night a year. No carry-on bags allowed due to limited space. One-way ticket only. Limited number of seats available; first come, first serve.
Do you ever feel like your travel rewards card has restrictions like this that make it hard to redeem the points you earn? Certainly this fictional card is an extreme example, but as the airlines struggle with profitability, their reward programs seem to get less flyer-friendly.
It's hard to find a frequent flyer program that doesn't have blackout dates, because those high-travel days are when the airlines make a big chunk of their money. But you can look for cards that have a simplified rewards redemption policy. Two examples are Blue Sky from American Express and the Southwest Rapid Rewards card:
- When you book your travel with the Blue Sky card from American Express, you can go online or call to redeem your rewards points for dollar credits on your statement.
- The Southwest Airlines card earns you Rapid Rewards points, and after you earn 16 credits within a two-year timeframe, you get a free flight anyplace Southwest flies.
If you're tired of building up miles without being able to use them, one thing you could look into is using your rewards perks for other things when you travel, rather than a free flight.
Something else to keep in mind: Check for promotions when signing up for travel cards. Especially at this peak travel time of the year airline credit-card rewards are being handed out in pretty generous chunks.
Ebenezer Scrooge Charity Card
Terms & Conditions — For every dollar spent, 1/10,000th of a penny will be donated to the charity of your choice. Bah Humbug!
Of course, there's no such thing as a Scrooge charity credit card, but some affinity cards sometimes pay low enough rewards they feel that way. The nice thing about charity credit cards is that the money you earn in rewards will automatically go to the cause you want to support.
Unfortunately, the amount you earn on most of these cards is less than you can earn with the best cash-back rewards cards. One alternative is to use the cash-back card instead and send the money in yourself. If you decide to use this approach, you'll want to see whether the cash-back card applies it as a statement credit on your card or actually sends you a check that you can cash and mail in as a donation.
One of the benefits of an affinity card, like one from the Sierra Club or The Nature Conservancy, is that you show support for your cause every time a salesperson swipes it. The design and logo may be eye catching and have the potential to strike up a conversation and help raise awareness.
If you use a cash-back card instead, you won't have your organization's logo on the card. However, there are other ways to display your support (tote bags, pins, bumper stickers) while also earning more money for your cause.
Rudolph Red Card
Terms & Conditions — Card will light up and glow a fog-piercing red once you've exceeded your Christmas budget. In addition, it plays Rudolph the Red Nose Reindeer non-stop until you've paid off your holiday purchases.
Public embarrassment from this made-up card isn't what any of us would choose, but if it would help us stay on budget, maybe it wouldn't be such a bad idea. There are a few options if you’re worried about spending over your budget this holiday.
The first is a payment program called the Chase Blueprint that’s offered on the Slate, Freedom, and Sapphire credit cards. If you end up spending more than you can afford to pay back on one of those cards, the “Split It” and “Finish It” options let you setup a plan defining how quickly you’ll pay down money you owe.
A different option that earns you interest instead of costing you interest is to set up savings goals using the Smarty Pig service. With Smarty Pig you define what you’d like to save for, then set up automatic deposits to help you save for that goal. Your money earns interest while accumulating; the trick to Smarty Pig is you have to plan ahead so the money’s there when you need it.
If you want to stick with cash to avoid going into debt but still want to earn rewards, another option is to use a cash-back debit card.
Hopefully this has given you a few pointers and options to help you maximize card rewards and minimize holiday debt this shopping season. There are a lot of holiday credit-card promotions going on for the shopping season that can earn you bonuses for signing up and spending. Be sure to look at how you earn and redeem rewards and which are best for you.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.