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Credit Cards |  | | With Christmas just a few weeks away, it’s the ideal time to make sure your money is working as hard as it can. That means your savings should be earning as much interest as possible, while you pay as little interest as you can on things like your credit cards.
Some credit card providers have changed their rates recently, so if you’re not sure how much you’re being charged, check your most recent statement or look at the card company’s website. Your next step is to see if you can get a better deal.
PICK A 0% DEAL
There aren’t as many credit cards with 0% interest deals now as there were a couple of years ago, but they haven’t disappeared completely. If you can find a card charging 0% it could save you a lot of money in interest payments if you shop with yours regularly or have a large balance.
If you’re planning some major spending, perhaps because you want to buy new furniture for your home or pay for a Christmas getaway, a card that charges 0% interest on purchases is definitely worth considering. |
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HOW MUCH CAN YOU SAVE?
If you were to spend £2000 at the beginning of the year, you would be charged around £320 in interest by the end of the year (if your credit card had an interest rate of 17% and you only made the minimum payments). With a 0% card you could be hundreds of pounds better off.
The catch is that most cards that offer interest-free purchases only do so for a fairly short time. Limiting the 0% offer to three months is not uncommon, while others start charging interest on purchases after six months. However, there are a handful of cards that are more generous (with 0% deals for 10 months or longer). Look at ‘best buy’ tables online or in newspapers to find those that are highly rated. |  |
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| YOU’RE PROTECTED
Even if you’ve saved up for the items you want to buy, you may still be better off using a credit card. If the goods you’re buying cost between £100 and £30,000 (even if you only put down a deposit by credit card) you benefit from valuable protection if they don’t arrive or the company you buy them from fails. However, it’s worth contacting the retailer first to see if they can provide a refund or the actual goods. |
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 | EARN VOUCHERS OR CASHBACK WHILE YOU SPEND
Some credit cards offer loyalty schemes that reward you for your spending - in some cases this will be in the form of vouchers to use at certain shops, in others it can be a cash payment credited directly to your card. Using a loyalty card means that not only can you take advantage of 0% interest offers, but also earn valuable rewards for all of your spend, so it’s worth looking for cards with both a 0% deal and a loyalty scheme on top. |
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| TRANSFER YOUR BALANCE
If you have a large balance that you can’t pay off in one go, perhaps because you used your card to pay for your summer holiday, you could ease the strain by transferring it to a 0% card. It can give your finances valuable breathing space.
Most cards charge a balance transfer fee of between 2% and 3%, which you will have to pay interest on, but you should still be able to save money overall. For example, if you had a balance of £2000 and your credit card charged interest at 17%, you’d owe around £165 in interest after six months, assuming you only made the average minimum payment. Swap to a 0% balance transfer deal for six months and you will pay no interest at all if you clear the balance in time. |
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