Best credit cards for holiday shopping – CNBC

Holiday shopping is in full swing, and the earlier you shop this year the better. Before you starting crossing gifts off of your list, consider how you plan to pay for them. A rewards credit card is a simple and effective way to earn cash back or points on all of your gift purchases.

With the best credit cards, you can earn between 2% to 6% cash back (or 2X to 6X points) on popular gifts, as well as food to fuel your holiday festivities.

To make your holiday shopping experience a bit more affordable, check out these 10 cards that reward everything from electronics and clothing to groceries and takeout.

There are hundreds of rewards credit cards available, making it tricky to settle on the right one. It’s important to take some time to choose the best card for your holiday shopping needs and long-term purchases.

All of the cards on this list are great to use throughout the entire year, so make sure you look at your past purchase history as a whole before settling on one card. You may even want to consider applying for multiple cards to maximize rewards.

First, decide if you’re willing to pay an annual fee for a card, since this can help narrow down choices. Rewards cards have annual fees ranging from $0 to $550, which gives you the flexibility to choose the card that makes sense for your budget. Do the math to see if an annual fee is within your budget and if it can be outweighed by the card’s benefits.

Next you should figure out what type of rewards you want to earn, and if you want a simple rewards program or one that may require some work. If you want a straightforward option, consider a card like the Citi® Double Cash Card, which offers a flat cash back rate on all purchases.

If you want to maximize rewards in common spending categories, such as dining and groceries, consider bonus rewards cards that offer over 2%/2X back on certain eligible purchases and may require activation. (Learn how credit card issuers classify purchases for bonus rewards.)

Beyond rewards, review the added card perks, such as annual statement credits and 0% APR periods, that can provide extra value.

Make sure you understand all the benefits your card offers, including the rewards rates, statement credit offers, shopping discount tools and intro 0% APR periods.

Once you’re familiar with the terms of your card, you can start to take full advantage of them. If you have a premium card like the American Express® Gold Card, set reminders to use the monthly $10 dining credit. Amex, Bank of America and Chase cardholders can activate various shopping discounts at apparel and dining retailers so you can earn extra rewards or statement credits.

And many of the cards mentioned above like the U.S. Bank Visa® Platinum Card include intro 0% APRs that allow you to pay for purchases over time, without expensive interest charges.

To determine which credit cards offer the best value, CNBC Select analyzed popular credit cards available in the U.S. We compared each card on a range of features, including rewards, welcome bonus, introductory and standard APR, balance transfer fee and foreign transaction fees, as well as factors such as required credit and customer reviews when available. We also considered additional perks, the application process and how easy it is for the consumer to redeem points.

CNBC Select teamed up with location intelligence firm Esri. The company’s data development team provided the most up-to-date and comprehensive consumer spending data based on the 2019 Consumer Expenditure Surveys from the Bureau of Labor Statistics. You can read more about their methodology here.

Esri’s data team created a sample annual budget of approximately $22,126 in retail spending. The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953). General purchases include items such as housekeeping supplies, clothing, personal care products, prescription drugs and vitamins, and other vehicle expenses.

CNBC Select used this budget to estimate how much the average consumer would save over the course of a year, two years and five years, assuming they would attempt to maximize their rewards potential by earning all welcome bonuses offered and using the card for all applicable purchases. All rewards total estimations are net the annual fee.

While the five-year estimates we’ve included are derived from a budget similar to the average American’s spending, you may earn a higher or lower return depending on your shopping habits.