As we head into the holidays, most of us are a lot freer with our spending. Buying gifts, flying from Los Angeles to grandma’s house on the other side of the country, throwing lavish parties, buying party clothes — there’s just no end to the ways we can spend. Have fun over the holidays, but don’t spend so much that you’ll have a buying hangover come January 2. When you do buy, you can still come out ahead by taking advantage of well-selected rewards credit cards. If you’re going to be spending anyway, you might as well get a few perks.

For every dollar you spend using a rewards card, you get points or cash back in return. It’s important to select a rewards card that offers kickbacks you will really use. This could be cash, airline miles, hotel stays, gift cards, gasoline, or any number of other items. Remember, when you open new accounts, your credit can take a temporary hit, so be circumspect in applying for new cards. You’ll also want to be careful that your spending doesn’t lead to racking up lots of new debt you’re not able to pay off; be smart with your spending.

Now, let’s look at the types of rewards cards available, and how they can actually help you over the holidays.

Types of Rewards Credit Cards

Half of the time, people don’t really look into their rewards card and just sign up. But you want to make sure to get one that is useful to you, has good interest rates, and gives a high rate of either cash or points for each dollar you spend.

These are the basic rewards card categories:

Cash back: Cash-back credit cards are the most popular. In return for using your card, you get cash back according to the amount of your spending. This could be in the form of a credit on your account, a check, or a deposit to your bank. You will want to consider the interest rate and the amount of cash you get back for each dollar spent. If you spend $1,500 a month with a cash-back rewards credit card that gives you 1% of every dollar spent, you are going to be paid $180 less than if you have a card that returns 2% over the course of a year.
Brand and loyalty: Loyalty cards give you rewards within a specific brand or partnership of brands. For example, airlines, hotels, and car rental companies have rewards cards that are cobranded with major credit card companies such as Visa, MasterCard, and American Express. Loyalty cards often come with extra benefits. For example, in addition to rewarding you with miles, an airline might waive fees for the first piece of luggage, give you travel insurance, offer priority boarding, and give you access to an airport lounge.
General rewards: General rewards cards are not tied to a particular brand and offer you options for redeeming your rewards. Some of them offer additional points in specific categories such as grocery stores. Some reward you for travel-related purchases, but they aren’t tied to specific brands.
Store rewards cards: Store rewards cards are for a particular vendor and not co-branded with a major credit card company. Having a store card is probably only worthwhile if you shop at that store often, and they usually offer substantial rewards.

The Light and Dark Sides of Rewards Credit Cards

In addition to cash back and points, some cards offer additional benefits such as warranties on merchandise, trip insurance, rental car insurance, and any number of benefits.

But there are some disadvantages. Rewards credit cards tend to have high rates, so depending how you use the card, the balance you carry month to month, and whether or not you redeem the rewards, you may end up actually spending more money with a rewards card. A recent U.S. News and World Report survey found that although 97% of rewards card holders had earned rewards in the last year, only 23% took advantage of all cardholder benefits.

Rewards cards also often have annual fees. With that in mind, it’s possible you may not even have a chance to collect any rewards, as some cards require you to spend a great deal of money before you are eligible for rewards.

Whatever you do with a rewards card, read the fine print. What may be a great deal for one person may not be for someone else.

How to Make Rewards Credit Cards Work for You

Although credit cards can be a danger over the holidays if you spend indiscriminately, when you plan and budget out your spending, you can make rewards credit cards work for you at this time of year.

Here are a few important tips to keep in mind during the holidays and year-round:

Use holiday spending to qualify for significant sign-up bonuses. To get big sign-up bonuses, some cards require you to spend quite a lot of money within a limited period of time. It can be difficult to reach that level of spending most of the year. But during the holiday season, you are buying gifts and flights and any number of other things, so having those purchases count toward a sign-up bonus makes sense.
If you are planning to travel over the holidays, check to see if any of your current credit cards offer you rewards for travel-related purchases. If you have not opened up any new lines of credit for some time, it might even be worthwhile to open a travel-related card for the sake of the rewards and perks.
If possible, use a card that pays higher rewards on the types of items you spend big on over the holidays. For example, if you are traveling, use a travel card. If you are throwing a lavish party, use a card that pays higher rewards for grocery store purchases. Of course, these cards can continue to reward you throughout the year.
Be aware that some cards have rotating bonus categories, and during the fourth quarter — holiday season — many of these cards give better rewards rates for purchases from department stores and specific online merchants. It pays to know what rewards your credit card is offering and to search out the cards that help you the most.
Consider opening a store card that gives discounts. If you buy quite a bit from a particular store and they offer nice discounts or other rewards for card holders, you may want to consider applying. However, store cards often come with high interest rates, so if you don’t pay your card off every month, you could end up actually paying more even with the cardholder discounts.

The Best Rewards Credit Cards

It’s pretty easy today to do a little research before applying for a rewards credit card. As a starting point, you might want to look at the lists of Best Rewards Credit Cards and their comparisons at U.S. News and World Report and NerdWallet. But bear in mind, things change, and you should review rewards cards every year. A little planning can help you live better and have happier holidays.