Christmas is rapidly approaching and with many looking to fund their festive spending by borrowing money, we take a look at the different credit card options available.
With the costs of Christmas mounting, from presents to food to simply going out, many are worried about how they are going to fund this year’s festivities.
As Hannah Mercedes-Skenfield, credit card expert as moneysupermarket.com comments “Christmas is an expensive time of year and as a result many consumers will be thinking about taking out a credit card in order to pay for their festive spending.
It is vitally important that people think about how they are funding their spending and find the best option to fit their needs. However, you will need to be quick, as it can take a few weeks to complete the application process and receive the card.”
Best Purchase Credit Cards
A credit card with a 0% purchase interest rate for a period of time is a good option if you are looking to spread your Christmas costs over a period of time.
The Tesco Clubcard Credit Card is currently the market leader for this option, offering a 13 month 0% interest period and gives customers one Tesco Clubcard point for every £4 spent.
As always with introductory offers, make sure you pay off your debt before the offer ends otherwise the interest rate will switch to a much higher rate.
Best Balance Transfer Credit Cards
A balance transfer card could be a good option if you have existing credit card debts. Using a 0% balance transfer card you can potentially free up funds for Christmas.
The Virgin Credit Card offers 0% interest on balance transfers for 16 months. witching a £2,500 balance from an existing credit card at a rate of 18.9 per cent to the Virgin Credit Card would save £464.24 in interest over the 16 month period.
Other similar balance transfer cards are available from MBNA and Yorkshire and Clydesdale Bank.
Best Low APR Credit Cards
If you are concerned that you will be able to pay off your credit card debt within a 0% balance transfer period, then consider a low rate, low APR credit may be an alternative to consider.
Such credit cards include Barclaycard Platinum Simplicity, Co-operative Bank Fixed Rate Platinum and Capital One OneRate.
Cashback and Reward Credit Cards
If you are going to pay off your balance each month, then a cashback or reward credit card is worth considering – these give you a cash bonus or reward points every time you spend.
- the American Express Platinum Cashback card pays five per cent cashback for the first three months up to a maximum of £100 and up to 1.25 per cent for longer term spending.
- the Egg Money World MasterCard pays 1% cashback with maximum £200 per annum.
Critically you do need to make sure you understand how each type of credit card works and assess which is best for your needs.
As Hannah Mercedes-Skenfield says “A credit card is a great and useful product if used correctly, but they are only really suitable for organised and disciplined borrowers. Use one incorrectly and you could end up paying through the nose for your borrowing.”
And adds “The golden rule with any credit card product is to set up a direct debit for at least the minimum payment as soon as you set up your account, as missed payments will lead to you losing your promotional offer.
Using a credit card for cash is a no-no as you will be charged interest at a much higher rate from the day of the transaction.”