When I was younger, my bank had this thing called a “Christmas Club” program. The way it worked was I’d sign up for a set amount of money I wanted to save for Christmas ($100 – yeah, I know big spender – I was about 10 years old) and then I’d receive a small book with 50 payment slips ($2 each). Each week throughout the year, I’d pay off each of those slips. As part of the program, the bank would pay the last one. Although this wasn’t a groundbreaking investment (about a 2% return), it did teach me a little something about saving and preparing for Christmas:
• Christmas is a lot easier when you save little by little throughout the year
• Getting free money for the act of saving isn’t bad either
Now that I’m all grown up, I have a little different strategy for getting ready to make my Christmas purchases. Basically, I now use multiple streams of cash back, rewards, and other programs to finance my gifts. Although this takes a little planning and approach, it’s well worth the effort.
Credit card rewards programs are my single best source for Christmas purchases. What I like to do is save up my cash back and bonus points all year-round and start cashing them in around October.
What’s the best bang for your buck? Redeem them for gift cards. There are a lot of reasons I like gift cards, but mainly:
• You can usually redeem gift cards for less than their face value. For example, Discover Card will often let you get a $25 gift card for $20. In other words, you can redeem more gift cards than you would physical cash back.
• Giving gift cards accomplishes two goals. They allow you to give a gift while at the same time allow the receiver to go on a shopping spree and buy exactly what they want.
This year alone, I have so far redeemed almost $400 dollars worth of gift cards for my family and friends (and I’m not done yet). If you’re looking to maximize your return, read my reviews on Chase Freedom (which is also offering a $200 sign-up bonus!), Fidelity Investments American Express, and American Express Blue Cash.
Similar to rewards cards, I use MyPoints to accumulate just about enough points to redeem around $50 in gift cards. The beauty here is that I spent almost NOTHING to get there except click a bunch of ads in emails. Click here to read my complete post about earning free stuff using MyPoints.
If it’s just straight cash I need, my iStockphoto account is where I turn. Through digitally licensing my music and recordings, I’ve managed to bring in an extra $100 to $200 a year. Click here to read my complete post how to get setup with an iStockphoto account so you can license your photos and music.
The airline miles programs usually have the worst return rate (in my opinion) for anything other than a plane ticket somewhere. But that doesn’t mean they should go overlooked or unused. Depending on how many miles you have, they could be redeemed for some items like small electronics, gift cards, and other stocking stuffers. My favorite:
• Magazine subscriptions.
Yes, for a few thousand miles, you can usually redeem them for a popular magazine subscription. Now you’re giving a gift that gives all year along!
Remember – The Key is to Start Early:
So even though my new strategy gets me a lot more free stuff than my $2 Christmas Club bonus use to, the idea is still the same:
• Start early
• Build up your rewards all year along
• Use multiple programs and streams to increase your redeeming potential
Good luck with your Christmas present shopping and Merry Christmas!