Should I Open a New Credit Card for Holiday Shopping?
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Written by
Joseph Hostetler
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Edited by
Jasmin Baron
Does opening a new credit card specifically for an upcoming shopping spree seem reckless? It certainly can be for impulse spenders. But for those who can handle the responsibility of credit cards, it can result in many hundreds (even thousands) of dollars in value.
To pick your perfect holiday shopping credit card, you need a strategy. We’ll help you decide if opening a new credit card is the right decision for your situation — and suggest some lucrative travel and cash-back credit cards to optimize your purchases.
4 Reasons To Open a New Credit Card for Holiday Shopping
If even one of the below benefits appeals to you, opening a new credit card for your holiday shopping could be a good idea.
Earn a Welcome Bonus
The fastest way to amass credit card rewards is by earning a welcome bonus. This can be difficult, however, because most bonuses are only unlocked after meeting a minimum spending requirement. So when you know you’ve got upcoming expenses, it’s a perfect time to open a credit card and earn its intro offer.
For example, the Chase Sapphire Preferred® Card currently offers 75,000 bonus points after spending $5,000 on purchases within the first three months from account opening. You could cash out that bonus for an easy $750 to offset your holiday purchases. Or, if you know the best ways to redeem Chase Ultimate Rewards®, you could squeeze $1,312 (or more) from these points by strategically redeeming them for travel.
Optimize Bonus Categories
Do you anticipate spending a lot in a specific bonus category (or with a particular merchant) but lack a credit card that’ll sufficiently reward you for said expenses? It could be time to open a new credit card.
With Black Friday and Cyber Monday just around the corner, you may well spend a considerable amount on sites like Amazon, prompting you to open a card like the no-annual-fee Prime Visa. It offers impressive benefits, among them unlimited 5% back at Amazon.com to those with an Amazon Prime membership.
If your current credit card earns just 1% back at Amazon, opening the Prime Visa could result in serious savings. $1,000 in Amazon spending with your current card would result in just $10 back, while the Prime Visa could net you a whopping $50.
You’ll find many unique and helpful bonus categories from a variety of the best rewards credit cards. Search for the one that’ll best serve your upcoming holiday shopping spree.
Receive Purchase Protection
Purchase protection is a credit card benefit that’s extremely handy for holiday shopping — particularly for big-ticket items. Just by making an eligible purchase with the right card, you’ll receive benefits like extended warranty protection, return protection and more.
My credit card’s purchase protection recently saved me $1,400. Nine months after the manufacturer’s warranty had ended, my Eight Sleep mattress topper began to leak. But because I had purchased it with a card that adds an extra year to the manufacturer’s warranty, I was completely reimbursed when I purchased a new one.
If none of your current credit cards offer purchase protection, this perk alone could be reason enough to open a new credit card.
Save With an Intro APR
While you should never make a purchase you can’t afford, financing a purchase that you can’t soon pay off with one of the best 0% APR credit cards can save you money. Some cards offer incredibly lengthy interest-free windows.
For example, the Wells Fargo Reflect® Card offers a 0% intro APR for 21 months from account opening on purchases and on qualifying balance transfers, then a 17.74%, 24.24%, or 28.49% Variable APR. If you’re certain you can pay off your purchase before you begin to incur interest, this can be a smart strategy.
Should I Get a New Credit Card for Holiday Shopping?
There are plenty of reasons to get a new credit card before your holiday shopping extravaganza. But should you?
The answer is simple: If you fear you’ll overspend, you should not open an additional credit card. You should never make purchases you can’t afford — and increasing your credit line is for some a temptation that may be too strong to resist. Be honest with yourself as to whether you can handle the extra freedom.
Pros:
- Channel spending to earn new credit card welcome bonuses
- Bonus categories can translate to exponentially more rewards earned
- Receive a favorable intro APR for large purchases
Cons:
- Easy to overspend
- Credit scores may drop slightly from hard inquiry when opening a new account
- Carrying a balance will result in sky-high interest charges
Cards To Consider When Applying for a New Credit Card for Holiday Shopping
Bank of America Customized Cash Rewards Credit Card
The no-annual-fee Bank of America® Customized Cash Rewards credit card comes with a $200 bonus after spending $1,000 on purchases within the first 90 days from account opening.
This card is excellent for holiday shopping thanks to its unique approach to bonus categories. For the first year, you’ll earn 6% back in the eligible category of your choice and 2% back at grocery stores and wholesale clubs (for up to $2,500 in combined spending per quarter, then 1%). After the first year, the 6% return rate decreases to 3%.
Eligible 6% categories include Black Friday/Cyber Monday-centric online shopping and home improvement and furnishings. Plus, new cardholders qualify for a 0% Intro APR for 15 billing cycles for purchases, and for any balance transfers made in the first 60 days. After the intro APR offer ends a 17.74% - 27.74% Variable APR will apply.
Citi Double Cash Card
The Citi Double Cash® Card, an advertising partner, offers $200 (fulfilled as 20,000 Citi ThankYou® points) after spending $1,500 on purchases within the first six months from account opening. As a new cardholder, you can also take advantage of a 0% Intro APR on balance transfers for 18 months, then 17.99% - 27.99% (Variable). A 17.99% - 27.99% (Variable) APR will apply for purchases.
This no-annual-fee credit card is ideal for those with holiday purchases that don’t fit neatly into conventional bonus categories. The card earns 1% back when you make a purchase and 1% back when you pay off that purchase (effectively 2% on all purchases), guaranteeing a healthy return no matter what you’re buying.
Capital One Venture Rewards Credit Card
The $95-annual-fee Capital One Venture Rewards Credit Card comes with 75,000 bonus Capital One miles after spending $4,000 on purchases within the first three months from account opening.
This valuable bonus, worth at least $750 in travel, is much easier to achieve when you’ve got considerable spending on the horizon. The card also earns a minimum of 2 miles per dollar on purchases, meaning you’ll always get a solid return.
Frequently Asked Questions About Maximizing Credit Card Rewards During Holiday Shopping
Is it worth opening a credit card for holiday shopping?
It’s worth opening a credit card for holiday shopping as long as you’re confident you won’t overspend. Opening a new credit card allows you to earn a valuable new welcome bonus, utilize new bonus spending categories, receive purchase protection and more.
Will opening a new credit card hurt my credit score?
Yes, when you formally apply for a credit card, the issuer will typically initiate a hard credit inquiry on your credit report. This temporarily lowers your credit score by a few points. But with good credit habits, your credit score will soon recover.
What happens if I don’t pay off my credit card balance after the holidays?
If you don’t pay off your credit card balance after the holidays, you will eventually begin to incur interest. Rewards credit cards typically come with higher-than-average APRs, which can easily negate any rewards you earn with the card. If you don’t think you can pay off a purchase within a month or two, don’t use a credit card to buy it. Otherwise, if you’ve already got lingering high-interest credit card debt, you might consider opening a balance transfer credit card, which can give you some breathing room to pay off what you owe.
