Holiday shopping: How to earn more cash back at department stores

Holiday shopping season officially kicks off with Black Friday, and you might be planning to hit your favorite department stores.

While you’re spending cash on holiday gifts, you could also be earning it with the right rewards card. As the department store deals begin rolling out, keep these tips for banking cash back handy.

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Maximize Chase Freedom, Discover cash back categories

Some cash back cards offer a flat percentage of cash back on every purchase. That’s great if you want a simple way to earn rewards on holiday shopping, but you could super-size cash back earnings with quarterly bonuses.

“Always look at the bonus categories for different credit cards and plan ahead for all of your purchases,” says Patrick Beckman, personal finance expert at consumer review site RAVE Reviews.

Here’s how fourth quarter bonuses stack up for two popular cash back cards:

• Chase Freedom: Earn 5 percent back on the first $1,500 in purchases at department stores and on purchases made with PayPal or Chase Pay through Dec. 31, 2019.
• Discover it® Cash Back: Earn 5 percent back on the first $1,500 in purchases on rotating categories at Amazon.com, Target and Walmart.com through Dec. 31, 2019 after enrollment (then 1%).
• Both Chase and Discover rotating categories require activation every quarter in order to be eligible for the bonus cash back.

If you’re wondering which one is better for the holidays, the short answer is both. Here’s why.

Chase doesn’t include Amazon, Target or Walmart on its list of approved department stores. Having both cards means you don’t miss out on any chances to earn 5 percent cash back at your preferred retailers.

Also, take time to look for card-linked offers that could afford more chances to earn cash back.

Chase Offers, for example, lets you browse deals through the Chase Mobile app or Chase Pay. You could pair deals from Amex Offers with earning 2 percent cash back at select U.S. department stores with the Blue Cash Everyday® Card from American Express.

Earn extra cash back on Target, Walmart purchases

Many department stores use the holiday shopping season to encourage shoppers to sign up for a retail store card. Whether it makes sense to take a store up on its offer depends on the qualities of the card.

Daniella Flores, personal finance expert and founder of I Like to Dabble, prefers the Target REDCard to other retail cards.

“It’s the best in my experience,” says Flores, “since you earn 5 percent cash back on all purchases.”

Unlike Chase Freedom and Discover it Cash Back, that 5 percent cash back rewards rate is unlimited. And as already noted, Chase excludes Target from earning the 5 percent quarterly bonus.

But there’s a catch. The 5 percent back is applied to purchases at the time you make them. A traditional cash back rewards card typically offers more flexibility when it comes to how you can redeem rewards. For example, you might be able to apply them as a statement credit, turn cash back into gift cards or merchandise or redeem rewards for travel.

If Walmart is a regular stop when making the holiday shopping rounds, you might consider the new Capital One® Walmart Rewards® Mastercard®. This card offers unlimited 5 percent back at Walmart.com, along with unlimited 2 percent cash back on restaurants and travel. All other purchases earn unlimited 1 percent back.

It’s also possible to earn 5 percent back on in-store Walmart purchases, but there’s a caveat.

“To get the 5 percent cash back at Walmart, you have to pay with your phone using Walmart Pay,” says Beckman. “If you just use the card by itself, you’ll only earn 2 percent back. Not bad, but not nearly as good.”

That promotion is temporary, however. New cardmembers can only earn the elevated 5 percent cash back rewards rate on in-store purchases made with Walmart Pay for the first 12 months after account opening. After that, in store Walmart purchases earn 2 percent cash back.

While you might be tempted by the cash back rewards rate a department store card could offer, there’s one thing to remember. These cards can carry higher APRs compared to a regular cash rewards card.

If you’re paying a 20-plus percent APR to carry a balance after the holidays, that could easily diminish the value of any cash rewards earned on shopping.

See related: Walmart Pay: How to set up and use at checkout

Double up on cash back with shopping apps

A growing number of apps effectively pay you to shop, making them worth a look for the holidays. Some of the most popular options for getting cash back from department stores include:

• Rakuten (formerly Ebates)
• Dosh
• RetailMeNot
• Ibotta
• TopCashback

To leverage these apps, you just need to link your credit card and shop away, says Sara Skirboll, shopping and trends expert at RetailMeNot.

These apps let you browse cash back details at department stores such as Macy’s and Kohl’s, choose which deals you want to activate, then shop as you normally would. The added savings come in when you earn cash back through the app and with your card.

For example, TopCashback offers up to 10 percent cash back in selected categories at Amazon. You could pair that with the Amazon Prime Rewards Visa Signature card, which offers 5 percent cash back, to collect a combined 15 percent back on holiday shopping.

The key is making sure you understand how each app works. With RetailMeNot, for example, Skirboll says you must link in-store cash back offers to your card before making a purchase. You also have to hit the minimum purchase requirements, if there are any.

Here’s another tip for using cash back sites at the holidays: check for discounted deals on gift cards to your preferred retailers.

Then, “combine the gift card with a promo code or digital rebate at checkout,” says Skirboll, to save even more money.

You can also use a browser extension like Honey to save when shopping department stores online over the holidays.

Honey automatically scans the web for you to find promo and coupon codes to apply to your purchase at checkout. It’s not quite the same as earning cash, but it’s another money-saving tip worth noting if you’re Christmas shopping on a budget.

Opening new cash back cards for the holidays? Be strategic

Opening a new cash back card to get an introductory bonus on department stores is tempting, but think long-term.

If you’re planning on taking a vacation in the next year, this might make sense, says Flores. “You can try to hit those minimum spends, get rewards and cash out half for the holidays and the other half when you plan on traveling.”

Retail store cards typically don’t offer introductory bonuses, so you’ll want to stick with traditional cash back cards. Just make sure you’re planning your holiday spending budget ahead of time.

“Sign-up bonuses will always earn you more cash back in the long run, but just make sure you’ll actually hit the bonus,” says Beckman. “If you fall short of the minimum required spend, you’ll lose a ton of benefits.”

In other words, match the card to your budget. Chase Freedom, for example, currently offers a $150 introductory bonus when you make $500 in purchases in the first three months. That may be easier to obtain than the introductory bonus offered by the American Express Cash Magnet® Card, which offers a $150 statement credit if you spend $1,000 in the first three months.

Whatever you do, have a plan for paying off holiday purchases as quickly as possible. “No one wants to pay those interest charges,” says Flores.