How to make money from your Christmas shopping!

Fancy getting rewarded for going Christmas shopping? Here's my run down of the best ways to earn as you spend...

Christmas 2010 is set to be especially merry for credit card companies! Tight financial conditions and a rise in online shopping will see many turn to their flexible friend to buy this year Christmas prezzies.

So if you’re giving the plastic a hammering this year – here’s a few ways to earn some extra money as you spend...

Cashback cards

A cashback credit card will give you back a percentage of your spend every time you use it – this is usually credited to your account in one lump sum every year.

But beware, cashback cards are only suitable for those who can pay off the balance every month. Otherwise, the interest will outweigh any reward. Here’s a breakdown of the best buy cashback cards:

As you can see, Amex’s 5% introductory cashback offer could work out well if you’re planning on making any large Christmas purchases. You won’t even have to clear the whole balance in the first month, as purchases are interest free for 6 months – meaning you can spread the payments out until June.

Amex are clearly targeting the big spenders with this card as you’ll need to reach a balance of £3,000 a year to get any cashback at all. To qualify for the higher 1.25% rate of cashback you’ll also need to put over £7,501 on the plastic every year (you get 0.5% cashback for annual spends of up to £3,500 and 1% for annual spends £3,501 to £7,500). And bear in mind that Amex isn't accepted everywhere. If you're not a big spender, you may prefer the Capital One World Mastercard.

Reward cards

Reward cards work in much the same way as cashback cards but offer points instead of cold hard cash.

Why should you go for this option? The advantage many reward cards have over cashback cards is that you can get your hands on the rewards faster, as you don’t have to wait a year for the rebate to be paid into your account.

Again, American Express has a few rewards cards on the market.  Express Rewards lets you earn three points for every pound you spend at major supermarkets (up to £500 per month), two for every pound spent at department stores and one everywhere else. Once you reach 5,000 points you can get a £25 gift voucher for stores such as Harrods, Tiffany & Co and M&S – perfect for the January sales!

Barclaycard also have a reward scheme called Barclaycard Freedom that allows you to earn reward money at over 30,000 retailers including House of Fraser, Pizza Express and Shell. This money can then be redeemed the next time you visit one of the stores.

Here’s a table comparing a few different reward cards:

To find out more about the Barclaycard Simplicity read A sensible credit card in a world of tarts.

Loyalty points credit cards

Many supermarkets now have their own credit cards that allow you to earn loyalty points as you spend – perfect for the big pre-Christmas food shop!

The Tesco Bank Credit Card gives you one Clubcard point for every £4 you spend. It also doubles as a Clubcard, so you’ll keep earning your standard points on top of the credit points.

Sainsbury’s offers a similar card that will earn you two points for every £1 spent in the supermarket in the first two years; here’s how the rates of the two cards compare:

To find out more about making money from store card schemes read Make the most of your loyalty cards.

Airmiles

Collecting Airmiles for spending on credit can allow you to turn your Christmas shopping into a cheap New Years break.

The Lloyds Duo card (which is actually two cards - a MasterCard and an Amex - but they are linked to one account) will give you one Airmile for every £1 purchase (up to £1,500) for the first 3 months if you use the Amex card, and one Airmile for every £50 spent on the MasterCard. Watch Rachel's video about credit cards for keen travellers to find out more.

British Airways offers a similar card that allows you to collect 1 BA Mile for virtually every £1 you spend – these miles can then be redeemed against BA flights. What’s more, if you spend £500 in the first 3 months you’ll get an extra 1,000 miles.

Let us know

Do you know of any more ways to get a few perks as you spend this Christmas? Or have you had any experiences with the cards listed in this article - good or bad? Please share your thoughts in the comment boxes below.

More: There’s never been a better time to get a credit card The 16 month 0% credit card showdown!