How to Spend Less, Get Cash Back for the Holidays

Card issuers are competing for your business by beefing up their rewards programs this holiday season, and retailers are slashing prices and offering online discounts even before "Black Friday." Here's how to find the best deals.

The average family spent more than $650 on holiday gifts last year and several surveys suggest that spending may go up by 2% to 3% this season. With consumers falling out of love with credit cards, some card issuers are beefing up their rewards programs for the holidays to lure them back. Their pitch? If you’re going to spend the money anyway, it makes some sense to get some of it back.

Discover Financial Services is one example. Use your Discover card to buy items online from now until Dec. 31 and you’ll get 2% cash back, double the regular 1% offer, up to a maximum rebate of $1,000. Use the Shop Discover portal to do your online shopping and you’ll get even more. You can shop at dozens of well-known vendors like Crate & Barrel, Gap, Sears, and JC Penney, and earn 5% cash back or more.

Most credit card issuers have similar portals where you can earn bonus points or dollars. While it can pay to use them, there are some caveats. If a retailer offers free shipping when you buy through its own website, you may not get that perk when you buy through a credit-card portal. Getting $5 back on $100 purchase, for example, may not offset the shipping costs. And you may not be able to use discount coupons when you buy through a portal, so you need to figure out whether the extra bonus is worth losing the discount.

Card issuers are also offering “spending bonuses” for active card users. Discover’s Discover More card and JPMorgan Chase’s Chase Fredom card both pay $100 in cash for new applicants who spend up to a preset level in a certain amount of time. (Discover’s limit is $500 within three months, while Chase’s is $799 in three months.)

When shopping online this holiday season, never pay more from an online retailer than absolutely necessary -- before you shop, search websites such as CouponCabin, KeyCode.com and RetailMeNot for the latest percent-off and free-shipping discount and promotional codes.

In addition to offering discount codes for those “in the know,” many retailers are getting a jump on “Black Friday” -- the day after Thanksgiving -- by offering deals now. For instance, Toys ‘R Us is giving 10% back on anything you buy, up to a maximum $50 in rebates. Savvy shoppers will check out sites such as DealNews for the latest deals before starting to shop.