How’s your post-holiday financial hangover? Let’s hope you don’t have one at all, but, if you do and your credit score’s healthy, you might well be thinking of exploring balance transfer credit cards. Many of these offer a break of 6, 12, 15 or even 18 months from high credit card interest rates through 0-percent APR introductory periods on the amount you transfer.

Balance transfer credit cards: two caveats

Before you get too excited about that weight being lifted from your shoulders, you need to heed three warnings:

1. As with most credit, you can’t always get it if you really, really need it. Credit card companies aren’t crazy (mostly), and they won’t lend to you if they think you are already in financial trouble. The stronger your credit report, the better your chances of approval for the card you want.
2. Don’t see balance transfer credit cards as additional lines of credit. It’s a classic mistake to transfer a balance and then run up others on the cards you zeroed. Instead, use the vacation from interest payments to more quickly pay down as much debt as you can, including that on the new card.
3. Most of these cards charge a one-off fee (often 3 percent) on the amount you transfer. That’s usually added to your new balance, and it’s rarely enough to undermine the economics of the deal, but unless you choose one of the fee-free offers described below, you ought to build it into your calculations. Use one of IndexCreditCard.com’s credit card calculators to model your savings and plan how you’re going to pay down your balance.

Balance transfer credit cards without the balance transfer fee

Sometimes, credit card companies run special promotions during which they waive balance transfer fees. They’re not always available, but you should invariably check for them before you apply for one of these credit cards. Right now, there are at least two such offers, and both are time-limited.

Discover has signaled that its offer is likely to expire on Jan. 31, so don’t delay if you’re considering making an application. Here are some of the headline points for this offer, which is on the Discover More Card:

• No balance transfer fee, annual fee or rewards redemption fees.
• Introductory period of 12 months during which there’s a zero-percent APR on both balance transfers and purchases.
• Discover’s usual rewards program, with cash back that can be earned based on eligible purchase categories.

Of course, before you make any credit card application, you should comparison shop online. If you were to do so at the time of writing, you’d find that Chase is offering a similar deal on its Slate from Chase card. There are no balance transfer or annual fees, and the introductory 0-percent APR lasts for 12 months if you have excellent credit, or six months if you have average credit.

Again, this offer is flagged as being available only for a limited time. So if you’re looking for a holiday hangover cure, you’d better act now.

It now looks close to certain: the 2011 holiday season was the time when many Americans once again fell in love with their credit cards, at least according to a Dec. 27 report in The Washington Post.

Credit card use “surges”

The Post’s piece cited support from two sources for its contention. First is — appropriately enough — First Data, a research company that tracks how consumers make payments. It found that, compared with the same period in 2010, credit card purchases increased by 7 percent in November, and then “surged” again in the first part of December. And it went on to quote Ed Ferrell, director of the Consumer Reports national research center:

If past behavior is any predictor, the closer you get to Dec. 25 the more likely you’re running into that store and buying whatever you can. Plastic really starts flying more.

The second source was an earlier study by Consumer Reports itself. This found that, although the number of consumers who said they were planning to use credit cards over the holiday season remained steady compared with last year, the amount they intended to charge to those cards had increased by 6 percent. On average, respondents thought they’d add $756 to their card balances this year.

Credit card debt remains an unknown

Of course, a large proportion of those using plastic are likely to pay down their balances in full when their next monthly statement falls due. But some won’t, and it’s the number of those that credit card companies and other industry observers will be watching carefully.

Stand by for close scrutiny of data from many private and public bodies as they report over the coming weeks, and especially of the Federal Reserve’s figures for total credit card debt, which are due to be released in early January for November’s balances, and early February for December’s.

Credit card debt and consumer confidence

Two questions many people are likely to ask themselves when they come to decide how much they should reduce their holiday card balances are:

1. How secure do I feel in my job?
2. How confident am I in my financial prospects?

The answers to both these may be more cheerful now than they have been recently. Everyone knows that the unemployment rate has at last begun to fall, and the optimism that comes with this was reflected in The Conference Board Consumer Confidence Index, which was published Dec. 27. Lynn Franco, director of the Board’s consumer research center, observed in a statement that day:

Looking ahead, consumers are more optimistic that business conditions, employment prospects, and their financial situations will continue to get better. While consumers are ending the year in a somewhat more upbeat mood, it is too soon to tell if this is a rebound from earlier declines or a sustainable shift in attitudes.

Credit card interest rates a factor

People who are considering carrying forward balances for the first time since the credit crunch should bear in mind one factor beyond their immediate prospects: the credit card interest rates they pay may be higher than they used to be. Right now, the IndexCreditCards.com rate monitor puts the average for all cards at 16.71 percent, while those for rewards credit cards average 17.58 percent.

It’s that higher rate that lies behind a piece of advice that’s oft-repeated here: charge to rewards credit cards only those purchases that you can clear at the end of the current billing cycle. Everything else should go on low interest credit cards.

“How much interest will I pay?”

Of course, even relatively high rates are unlikely to prove a serious problem for those thinking of paying down their holiday spending over two or three months. But anyone planning to carry credit card debt over the long term should probably take the costs of doing so seriously. So, if you’re in that position, why not check out this site’s credit card calculators, which can answer a range of questions, including “How much interest will I pay?“

With most of it over, we can now look back over the 2011 holidays, and ask: Was it worth it? Of course, spending time with family and friends is priceless, but the season as a whole comes with a big price, not least, for many, paying for it afterwards. Two November surveys revealed just how stressful the financial aspects of the season are to many Americans.

Credit cards taking the strain…

USAA’s third annual holiday spending survey found that 48 percent of respondents were going to use their credit cards to buy holiday gifts (up from 42 percent in 2010), but surprisingly few consumers planned to clear their credit card debt immediately. As the organization’s press release put it, “Older is wiser when it comes to credit card management.” The percentage of respondents who intended to fully pay down their balances as soon as possible were:

• 55-64 year olds: 41 percent
• 45-54 year olds: 37 percent
• 35-44 year olds: 34 percent
• 18-34 year olds: 27 percent

Yep, nearly three in four young people said they were going to roll forward their card balances. USAA’s June Walbert, who’s a Certified Financial Planner, took a dim view of that. Speaking about all card users, she said in a statement:

Credit cards have many benefits, including general convenience, the ability to reap rewards, and fraud protection. However, financially responsible shoppers must remember to pay off the balance each month to avoid paying interest fees.

… or contributing to the stress?

The other November poll was conducted by CBS News. Over one-third of this survey’s respondents said that contemplating their holiday spending made them more stressed in 2011 than in previous years. That’s no surprise when you hear that 66 percent of those with household incomes under $50K a year were either somewhat or very concerned about not being able to afford the gifts they wanted to buy. Add in those with higher incomes, and you still find half of respondents with these concerns. A whopping 80 percent said they only had just enough or not enough money to buy the gifts they wanted.

Many of the 33 percent who didn’t have enough (more than half of the under-$50K category) may have taken on credit card debt to cover their shortfalls. However, that’s not always a wise move. In October, Consumer Reports found that 14.1 million Americans were then — 10 months after the festivities had ended — still paying back card debt they took on to cover holiday expenses in 2010.

Yet another poll was published just before Christmas by an organization called FreeScore.com. It’s hard to know how seriously to take its results because the press release that reported it failed to include any details of the survey’s sample size or methodology. But, for what it’s worth, it found:

1. The average consumer spends four hours each day worrying about or thinking about debt.
2. As many as 11 percent spend a (to this blogger, literally) incredible 10 hours a day worrying or thinking about debt.

The press release did include one indisputable fact. If you are stressed out about credit card debt (or any other sort), get advice. A good starting point is the National Foundation for Credit Counseling.

Prepaid credit cards are clearly on the upswing. According to a U.S. senator’s website, Mercator Advisory Group  reckons that the amount of money loaded onto “open loop” prepaid cards that you can use wherever American Express, MasterCard and Visa are accepted (depending on the card) is going to increase to $233.8 billion in 2012 from $60.4 billion in 2009 — nearly a fourfold increase over three years. That’s a lot of dough.

And you can see why prepaid credit cards are so popular. Anyone with a little upfront cash can get approved for one, so they’re ideal for youngsters and those with badly damaged credit. And they can be a great way to avoid credit card debt or overdrafts: you can only spend your own money. Once the cash you’ve preloaded runs out, the card stops working.

Prepaid credit card pitfalls

If only that were the whole story, it would be easy to endorse prepaid cards as a panacea for so many ills. But it isn’t. On Dec. 19, Sen. Robert Menendez (D-N.J.) highlighted a number of issues:

1. If your prepaid card is lost or stolen, you may stand to lose the balance that remained on it.
2. If your card issuer goes bankrupt, you could similarly lose that balance.
3. Many cards come with horrifically high hidden fees.

As Menendez notes on his Senate website:

This season, its [sic] hidden fees that are making for a Blue Christmas. Unsuspecting consumers are finding out the hard way that prepaid cards often give you much less than the dollar amount you load onto them thanks to unnecessary fees. We need to ensure that families who rely on prepaid cards are not surprised by hidden charges.

To counter these issues, Sen. Menendez is proposing the Prepaid Card Consumer Protection Act, which would require:

1. Comprehensive disclosure of all fees before the card is purchased
2. Limits on the fees that can be levied
3. Protections if a card is lost or stolen
4. FDIC cover, so money wouldn’t be lost if an issuer goes bankrupt

With luck, such regulation could prevent repeats of a story told by The New York Times a couple of years ago: When Floridian Damon Saxton tried to access money from his prepaid card using an ATM he accidentally hit the wrong keys while he was entering his PIN. His card issuer charged him $2.95 “for a declined ATM transaction.” So he called the customer service center to complain. His pleas fell on deaf ears, but he was charged a further $1.95 for the privilege of calling.

Secured credit cards have advantages over prepaid

If your credit history is too damaged to qualify for an unsecured credit card, then a secured credit card may be a better option for you than a prepaid card. These provide many of the statutory and other protections that mainstream credit cards offer. IndexCreditCards.com recently published an article “Best and worst secured credit cards for 2012″ which teases out some of the differences between these cards.

It’s a busy time of year, so here in a very quick read is a news digest comprising four stories that haven’t been covered in the main IndexCreditCards.com news blog.

Credit card giving boosted by Capital One

‘Tis the season for charitable giving, so first up is Capital One, which recently reminded its customers of its donations website, www.capitalone.com/give. Generally, credit card companies deduct interchange fees from charitable donations, which means that up to 5 percent of any gift made using plastic goes into issuers’ coffers. But for those using this site, Capital One waives its fees, and 100 percent of your donation reaches the good cause of your choice.

You can search the site’s 1.2 million-strong database for the charity of your choice by name, type of cause or zip code, and you can also redeem points from Capital One rewards cards to make your donation. As Katya Andresen, the chief strategy officer at Network for Good, remarked in a press release:

While offline giving has declined through the economic downturn, online giving is on the rise and people are looking for easy, convenient and cost-effective ways to be generous. The Giving Site is a great tool for consumers and we are thrilled that Capital One is getting extra money to charities at a time when every penny counts.

Too busy to shop? American Express takes it on for you

If you’re lucky enough to have an American Express Platinum Card, your holiday shopping just got a whole lot easier. That’s because the concierge service that comes with that particular card is offering to do all the legwork for you.

All you have to do is send a list of the gifts you require, and the concierge team will research your options, find you the best price, buy what you want on your card, and then make sure the items are delivered in time for Christmas.

Store credit cards in decline

The amount people spent on “private-label” (store and similarly branded) credit cards plummeted by 14.4 percent to $183 billion in 2010, according to a study conducted by Packaged Facts and reported in Marketing Daily on Nov. 30.

Meanwhile the “receivables” (the total credit card debt outstanding) on private-label plastic fell even further, down 18 percent during last year. Much of this may be down to credit card companies “charging off” debt (writing it off their books and passing it on to collection agencies), though the dollar volume spent on this sort of card was also down.

This may well be a good thing. Although private-label plastic often comes with tempting discounts and exclusive offers, mainstream credit card interest rates tend to be lower than those for store cards, and the latter are frequently an expensive form of credit card debt.

It’s generally better to use low interest credit cards — rather than store cards or rewards credit cards — for purchases that you won’t be paying down quickly.

Record-breaking online holiday shopping

ComScore, a research company specializing in the digital world, is tracking online holiday spending. And 2011 is proving to be a bumper year. Between Nov. 1 and Dec. 4, online spending reached $19.57 billion, 15 percent up on the same period in 2010. On Cyber Monday (Nov. 28) alone, it reached over $1.25 billion, 22 percent more than that day last year.

This is almost certainly good news for credit card companies. More and more people are recognizing the superior statutory protections offered to consumers by credit cards — as opposed to debit, gift and prepaid cards — and these can be especially valuable online. So the more people shop on the web, the more the turnover of card issuers is likely to rise.

When the big-six credit card companies published their November figures earlier this month, things were looking good. According to a Dec. 15 report from Moody’s Investors Services, rates for late payments and defaults had recovered from their recession and post-recession highs and were back to normal.

Credit card debt less of a problem

In its coverage of the data, The Washington Post quoted Jeff Hibbs, an analyst with Moody’s, who predicted that the default rate could drop still further: to under 4 percent from November’s annualized level of 5.2 percent. When you remember that it peaked just 18 months ago at 10.44 percent, that’s a pretty amazing decline.

Of course, much of that fall is almost certainly down to many Americans taking a more responsible attitude to their finances and actively paying down their credit card debt. However, the Post points to two other factors:

• About $75 billion in credit card debt has been “charged off” (written off credit card companies’ books and passed to collection agencies) since the start of the recession, according to Moody’s.
• TransUnion says that over 8 million consumers dropped out of the card market between when the recession began and the end of 2010. Presumably, some of these voluntarily cut up their own cards, while others saw their accounts closed unilaterally by their credit card companies.

Whatever the causes, few would be other than very happy that card debt today is less of a problem for millions of American families than it has been recently.

Credit card offers set to rise?

Credit card executives are as cheered by this news as the rest of us. Their balance sheets have for years been burdened by charge-offs and provisions to cover future charge-offs, and now that they’re largely free of those it’s like a return to the good old days of high profits. Just last week, for example, Discover Financial Services announced that it would increase its dividend to 10 cents from 6 cents, a jump of 67 percent, according to The Chicago Sun-Times.

And, as those executives bellow out their “Happy days are here again” refrain, they’re looking for ways to make the good times even better, both by taking market share from each other, and by growing the overall market by welcoming back into the credit card fold at least some of those whose poor credit scores had previously excluded them.

As was reported in the IndexCreditCards.com news blog a few weeks ago (Credit card debt nightmare to return?): “…between July and September of this year, more than a quarter (25.2 percent) of all new cards issued went to subprime borrowers,” according to data from TransUnion. The Washington Post expects more of the same, remarking: “…potential customers with moderate credit scores should find cards easier to obtain in the coming year.”

True, there’s as yet little sign that card issuers are returning to their pre-credit crunch habit of seemingly mailing plastic to consumers on the basis of a single lending criterion: the ability to mist a mirror. However, the ever-increasing volume of credit card offers being sent to an ever-widening pool of consumers may be reason for concern.

It feels so good to know that for many consumers credit card debt is no longer a major issue. Let’s at least pause to enjoy the novel sensation before re-creating the circumstances that led to problems in the first place.

After several years of declining use, credit cards are poised for resurgence. Despite the nation’s very rocky economic recovery, consumers appear to have halted their belt-tightening and bank incentives to use credit cards rather than debit are gaining appeal.

- Beth Robertson, Director of Payments Research, Javelin Strategy & Research, Nov. 28, 2011

Credit card use set to explode

The press release from which that quote was taken includes some other interesting predictions. Javelin Strategy & Research forecasts that credit card use for online purchases is going to grow by 63 percent over the five years from 2011 to 2016. The same figure over the same period for debit cards is just 2 percent. “Alternative” online payment methods, such as prepaid cards and gift cards are expected to rise, but even by 2016 they’re set to account for only 19 percent of all online purchases. By that time, Javelin expects, debit cards will account for 21 percent.

It’s not just online that credit cards are coming back into their own. On Dec. 5, First Data Advisors recalled that it had first noted a change in credit card trends back in February, and since August had seen year-over-year growth in credit card spending outstripping that for both signature and PIN debit card transactions. During Thanksgiving Thursday and Black Friday this year, the value of all credit card transactions was more than 10 percent higher than over the same two days in 2010.

Rewards credit cards and credit card offers

So why the turnaround? It would be nice to think that it was because consumers had read “7 ways in which credit cards beat debit cards,” an article that appeared on IndexCreditCards.com just about a year ago. But the real reasons are probably different. Since the Durbin Amendment reduced the cut that banks receive of each debit card transaction (but left that for credit cards at the same level) there’s been a strong reason for financial institutions to push consumers towards credit card use. And that’s most obviously revealed itself in two ways:

1. On Dec. 5, CNNMoney quoted data from Mintel Compermedia that suggested that 1.3 billion credit card offers were mailed to consumers during the third quarter of 2011. That’s an 85-percent increase over the level at the start of 2010.
2. Rewards credit cards are now a lot more generous, by and large, than they were a year or two ago. Credit card companies see these as key ways both to build market share and to drive up their customers’ use of their products.

Credit card debt not yet a problem

Javelin’s study tossed up one troubling statistic. People using debit cards for single online purchases on average spend $58.29 on each transaction. However, those using credit cards in the same circumstances spend $82.10. Now, there could be a number of explanations for this, but one may be that consumers are tempted to spend more when buying on credit.

So how scared should we be by the prospect of Americans getting carried away with their card spending, and loosening their belts too much? Well, not too scared, at least according to research published Dec. 7 by TransUnion, one of the big-three credit bureaus. In a press release, Steve Chaouki, group vice president in the company’s financial services business unit, remarked:

Credit card delinquencies are expected to remain fairly steady in 2012 ranging between 0.69 percent and 0.76 percent — levels far below those typically observed in the last 15 years. In today’s uncertain economy, consumers have found that credit cards are among their most valued assets due to the flexibility they provide. As a result, consumers have made a concerted effort to make on-time payments and maintain relatively low balances. In fact, credit card debt per borrower in the third quarter of 2011 stood at $4,762, approximately $1,000 less than the second quarter of 2009, the quarter in which the recession ended.

So maybe we can relax a little. But the specter of credit card debt still haunts many of us, so if you choose to use your plastic, you may want to do so with prudence.

Stand by for a blockbuster Black Friday weekend. Recently, the National Retail Federation (NRF) reported the results of a survey that suggested that half of all Americans (152 million) are planning to make purchases either in-store or online over the three days running from Friday through Sunday. That’s way up on last year, when some 138 million were expected.

Online shopping

How many will venture out and how many will head for their home computers may well depend on the weather and the crowds. Extrapolating from the NRF survey sample, about 74 million are certain to visit stores, while another 77 million say they plan to wait and see how cold it is and how mobbed the malls are.

One thing seems certain, at least according to new research published by comScore on Nov. 23: it’s going to be a bumper year for online sales. Just during the first 20 days of November, retail e-commerce sales reached $9.67 billion, 14 percent up on the $8.47 billion spent during the same period last year. comScore now forecasts that such purchases for the whole 2011 holiday season will top $37.6 billion, 15 percent up on 2010’s equivalent number.

Credit cards and online shopping

Presumably, a large chunk of that will be spent using credit cards. There are at least four reasons why anyone with self-discipline, sound finances and cards (particularly rewards credit cards) should think twice before paying for online purchases any other way:

1. Credit cards provide better statutory protections against fraud and shoddy or wrongly described goods than any other payment method.
2. Many rewards credit cards are currently offering exceptional deals both on the cash and points you can earn and on redemptions.
3. You get an interest-free “loan” between the date you make a purchase and the date you have to settle your next card statement.
4. Many credit cards have built-in protections that can extend warranties and boost your right to return unwanted goods.

Credit card debt and temptation

Of course, those who can’t resist tempting bargains may be better off sticking to debit cards, checks and cash. Writing in the Detroit Free Press on Nov. 24, Susan Torpor gave a sobering example of how those extra impulse purchases can add up–and how they can affect your credit card debt.

Suppose, she suggested, that you charge an extra $25 a day in impulse purchases to your credit cards between Thanksgiving and New Year’s Eve. If you only make minimum payments on the $950 you run up, it should, she calculates, take you six years to clear the debt. And, if your credit card rates average 15 percent (lucky you!), you’re likely to pay $501 in interest charges for the privilege.

No wonder credit card companies are so keen to tempt you with promotions and enhanced rewards this holiday. They want your money.

It’s been a long and painful path, but most of us finally seem to be on top of credit card debt. But have we learned our collective lesson?

Credit card debt problems contained…

Two authoritative reports on card debt have been published in the last week, and both contained their share of cheerful reading. The first, from Fitch Ratings, show that “charge-off rates” (when credit card companies write off debts as noncollectable and pass them on to collection agencies) remain very low. In the third quarter, they averaged, for the top-seven card issuers, 4.53 percent which was down 363 basis points (bps) year over year. The other report, from TransUnion, showed that the number of delinquencies (when cardholders fall 90 days or more behind on their accounts) remains “near record low levels.”

…for now

However, both reports also contained somewhat muted warnings that there could be clouds on the horizon for consumers and credit card companies alike. TransUnion reported that the third quarter saw the first rise in delinquency rates for two years. And, of course, many delinquencies turn into charge-offs, so it’s no surprise that Fitch says: “…higher provision expenses [are] expected for 2012.” In other words, card issuers should set aside more money to cover bad debt next year.

Now, it’s true that neither of the reports is predicting serious problems anytime soon. But they contain enough worrying data to cause this blogger some issues.

Credit card offers going subprime

Perhaps the most worrying of all was a remark contained in TransUnion’s press release. Ezra Becker, who’s the company’s vice president of research and consulting in its financial services business unit, said:

We find card delinquency being driven by a number of factors. One such driver is the changing risk profile of consumers opening new credit card accounts. In the face of competition for prime consumers and the clear deleveraging efforts of those consumers, lenders have been gradually shifting their focus to the sub-prime market.

Yep, between July and September of this year, more than a quarter (25.2 percent) of all new cards issued went to subprime borrowers, according to TransUnion’s data. And that just a few short years after an almighty credit crunch created by lending irresponsibly to the subprime.

Credit card interest rates another problem

But it’s not just subprime borrowers who pose a threat. Dan Geller, an executive vice president with Market Rates Insight Inc., told PaymentsSource on Nov. 15:

Issuers are taking a bigger risk than in the past by stepping up promotions and tempting consumers with deals to spend more on their credit cards as we head into the holiday season with the hope that higher spending will lead to balance carry-over.

So issuers are using special credit card offers to tempt the prime and the subprime to take on debt. You can see why. Credit card interest rates are currently unusually high (16.75 percent APR, at the time of writing, according to IndexCreditCards.com), so having customers carry forward balances would boost interest income, one of the card sector’s most significant revenue streams.

Credit card debt to rise?

The latest Federal Reserve data on consumer credit suggest that, in September, revolving credit (which is nearly all credit card debt) fell by 1 percent. However, not everyone is convinced that the Fed’s figures accurately reflect reality. One who may wonder about that is Robert A. Dye, chief economist at Comerica. In a Nov. 15 email, he wrote:

Undaunted by flat-lined incomes, shoppers forged ahead in October driving retail sales up by 0.5 percent, after a strong 1.1 percent gain in September. The income constraint means that households are willing to add debt or reduce their saving rate in order to keep spending more. We saw both mechanisms in play in September and may well see the same when the October income and consumer credit data are published.

So what do you think? Have we learned our collective lesson? Or are we circling back to set off again on that long and painful path?

Nobody could blame you for wanting to bury your head in the sand. Why should you be planning your holiday spending now, when you’ve got Thanksgiving to worry about? But, if you can spare a few minutes, here are some ideas that could put cash back in your pocket. So let’s talk turkey.

Credit card companies and sign-up bonuses

As you probably know by now, credit card companies are currently locked in a desperate battle to win market share. This largely explains the recent rush of enhancements to rewards credit cards. And it may also be behind sign-up bonuses, which card issuers pay on some products simply to say thank you for becoming a new customer and for spending a certain amount on your new plastic.

Right now, at least two cash back credit cards are offering a whopping $200 in sign-up bonuses, and that’s in addition to the usual rewards (up to 5 percent cash back) you would normally receive. But, before we explore those cards, here are two caveats:

1. You’re likely to need excellent credit in order to qualify for either, so don’t bother reading further if you’ve had financial problems recently. It’ll probably only make you feel worse.
2. Deals like these are seductive. Don’t apply if you already have significant credit card debt, or if you’re one of those people who can’t resist temptation when it comes to spending.

Cash back credit cards from Chase

The first of today’s cash back credit cards to offer a $200 sign-up bonus is the Chase Freedom® Visa card. To get the bonus, you have to spend at least $500 within the first three months that you have it, which may not be a problem, given the time of year.

Chase pays 5-percent cash back but only for purchases (capped at $1,500 a quarter) made within revolving categories that change every three months. So, for example, during the current (October-December) quarter, that 5 percent is paid on purchases made in restaurants, department stores and movie theaters, as well as on charitable donations. Generally speaking, you get 1 percent on everything else, though you can get up to 10 percent if you shop at certain retailers through Chase’s online portal.

There’s no annual fee on this card, but interest rates, which are variable, are currently 15.99 percent to 22.99 percent annual percentage rate (APR), depending on your creditworthiness. That isn’t uncompetitive, but it’s hardly generous either. It might be best to charge to this one only purchases that you know you can pay down quickly, and to use low interest credit cards for everything else.

Cash back credit cards from Citi

The second card (only alphabetically) is the Citi® Dividend World MasterCard®. The sign-up bonus deal is precisely the same as Chase’s: $200 back if you spend $500 during the first three months after your account is opened.

And its rewards are very similar too. Its bonus categories also pay 5 percent (1 percent on everything else), and change each quarter. Citi’s choice of categories for the current quarter seems even more seasonally appropriate than Chase’s:

1. Department stores
2. Clothing stores
3. Electronics stores
4. Toy stores

Citi caps the rewards you can earn in any one calendar year at $300, but makes an exception for purchases made through the Citi Bonus Cash Center, where they’re unlimited. Like the Chase card, Citi’s card has no annual fee, and, interestingly enough, both Chase and Citi charge precisely the same credit card rates on these two near-identical products. So the same suggestion applies about not using it for purchases that you can’t pay down quickly.

The fact these two credit cards are so similar may relieve you of one holiday headache: choosing which to apply for. Just toss a coin. Heads you win, tails you win.

This content is not provided or commissioned by any company mentioned in this post. Opinions expressed here are author’s alone and have not been reviewed, approved or otherwise endorsed by any such company. This site is compensated by companies referenced in the blog posts through advertising, affiliate programs or otherwise.