Credit cards: Be strategic – and other holiday shopping tips

Credit cards should be used with their cash-back rewards in mind. That's tip No. 3 of our holiday shopping dos and don'ts.

It's beginning to look a lot like another frugal Christmas.

Consumers are going to continue in belt-tightening mode, a number of holiday spending surveys say. The National Retail Federation expects holiday spending to be slightly higher than last year and Gallup finds consumers anticipating they'll spend a bit less.

But both are pegging this year's typical household gift outlay at around $700 -- a significant amount, but a sum that most consumers will still have to stretch if they want to achieve the holiday of their dreams.

The good news for consumers is this: Lots of discounting is likely, early and late in the season. The National Retail Federation says it expects 80 percent of online stores to begin marketing within the next week and a half. More stores will feature free shipping.

Here's how to catch the best deals while you're shopping your way through that holiday list.

-- Don't pay retail. Walmart has already started discounting toys, and other stores are likely to follow. Shoppers have become conditioned to buying items only when they are on sale. Know what the items you want to buy should cost, and wait until they hit that price. As any experienced shopper knows, not every "sale" is actually a sale. Use price comparison websites like PriceGrabber (www.pricegrabber.com) and Bizrate (www.bizrate.com) to make sure you're getting the best price on brand-name items. Then use a couponing site like Retail Me Not to see if the retailer your chose is offering any additional discounts.

-- Be strategic about your credit cards. Many credit card issuers have switched to cash-back rewards programs that shift the kinds of purchases that garner big rewards every quarter. For example, both Citi and Chase bank cards are offering 5 percent cash back on department store purchases for the holiday spending season. Chase is also offering 5 percent back on grocery stores; Citi is offering 5 percent at clothing and electronic stores. So, if you have both cards, use the Chase when you're shopping for your Thanksgiving turkey and trimmings; use Citi when you're sweater shopping. A key to programs like these is that they require you to register every three months for the quarterly special, so make sure you register with your card company.

-- Use retail credit cards judiciously. Don't apply for every store credit card just to save 10 percent or 15 percent on the shopping day, but look for a boost from the retailers you use most. For example, a new card from Target offers 5 percent back on all Target purchases all the time, not just on the day you apply for the card. That's probably worth it if you're a big Target shopper.

-- Visit the portals. Some credit card companies run their own online shopping "malls" through which you can get additional discounts, but plucking the really good bargains out of all the deals posted can be challenging. "It's just overwhelming," says Beverly Blair Harzog of CardRatings (www.cardratings.com)."Some of these pages are very, very confusing." She tells shoppers to use a shopping list and push through the clutter, because they often offer significant discounts. Some to check are the MasterCard Marketplace (www.marketplace.mastercard.com) and Visa discounts (here). Individual issuers, like BankofAmerica and Chase, also offer their own online shopping portals. Check the websites of all of the cards you have.

-- Don't pay for shipping. Most online stores will be trying to win customers by offering free shipping throughout the holiday season. If the store you're shopping at isn't one of them, check to see if it is participating on Free Shipping Day (www.freeshippingday.com/) on December 17. More than 1,000 retailers have signed up. Limit your purchases to stores that won't charge you shipping on returns, either.)

-- Use your phone. A host of smart phone applications will do your comparison shopping for you. A few to check out are ShopSavvy (which includes a barcode reader), Compare Everywhere, Save Benjis and Sccope. They will search online and at local retailers to find a better price on the items you enter.

-- Join the crowd at the mall. Even after you add up all of the online discount codes, the free shipping and the credit card portal kickback, online prices still are often higher than they are in stores, notes Harzog. "If you go to the mall or a discount store in your area, you're going to get a better deal, probably, but it takes time to do that."

So, bring your list, your phone, and your patience. Consider it part of the holiday season experience.