Christmas may be the season of good cheer, but it’s also the time many people get sucked into a serious debt spiral. If you’re about to start spending on festive food, treats and pressies, having the right credit card could make a huge financial difference.
Read on to find out the best credit cards to save you money or even make you money this Christmas!
- For a frugal Christmas
- If you’re determined to spend on credit
- If you clear your balance every month
- Remember the direct debit!
- Check your credit rating
If Christmas spending is going to send you into debt, do think about cutting back. Blowing your bank balance in December will leave you with a very nasty financial hangover in January, which is never a good way to start a New Year.
Your loved ones may actually be relieved if you decide to have a budget Christmas this year, as it will take the pressure off them to spend big. If you have credit card debt already and you want to get your finances in shape for the New Year, think about switching to a 0% balance transfer credit card.
With one of these, you won’t pay any interest on the balance you move onto it until the offer period ends. So you could save a packet every month if you’re currently paying interest on your credit card debt.
The best 0% balance transfer card on the market is currently Barclaycard Platinum Card which gives you a staggering 34 months 0% interest.
Other good cards include the Halifax Balance Transfer credit card which offers 33 months at 0% and the Nationwide Balance Transfer credit card offers 0% interest for 26 months.
With any balance transfer card, once you’ve made the transfer, try your hardest to clear the balance before the 0% period comes to an end. Credit conditions are still pretty tight up at the moment, and there’s no guarantee you’ll be accepted for another 0% deal when your current one ends.
If you’re absolutely determined to spend on credit this Christmas, you can minimise the damage by using a 0% purchase card. With one of these, you’ll pay no interest on new spending for the length of the deal.
At the moment, the Tesco Clubcard credit card 18.9% APR) is leading the pack offering 19 months at 0% for purchases as well as Clubcard reward points for spending.
Other useful cards for spending are the Sainsbury’s Nectar Purchase Card which offers its shoppers 0% for the first 18 months for purchases. As with the Tesco card, you collect Nectar loyalty points as you spend – even better, the card also offers 18 months at 0% on balance transfers with a 3% fee (typical APR is 16.9%). Handy if you want one card for both balance transfers and spending.
With these cards you can spend this Christmas and not pay interest on your debt until the introductory period runs out. However, this isn’t an excuse to splurge! As soon as Christmas is over, start whittling away at that balance to make sure you’ve cleared it before your 0% deal runs out.
If you’re confident you can clear your credit card balance every month, you could actually make money while you’re doing your Christmas shopping by using a cashback card. This sort of credit card does what it says on the tin – paying you back a percentage of what you spend.
The best one around at the moment is the American Express Platinum card, which gives you a juicy 5% cashback on purchases in your first three months (up to £2,500). After that, you can earn up to 2.5% with no limit on how much you earn.
Just remember that some places still don’t accept American Express and ONLY get this card if you can pay it off every month. If you end up paying interest it will definitely outweigh any cashback benefits.
Whichever credit card you choose, remember to set up a direct debit for the monthly minimum payment straight away. If you forget, your card provider will jump on you for non-payment and your nice 0% or cashback deal is liable to be whisked away from you.
Finally, it’s a good idea to check your credit score before you apply for a new credit card.
You’ll need to have an excellent credit rating to get your hands on some of the cards mentioned here – and if your application gets turned down, that itself could damage your rating. To find out more about how your credit rating works and how you can improve it read our 10 easy ways to improve your credit rating.
To see if you have a realistic chance of success, check your credit score for free with a 30 day trial subscription to Experian. Just make sure you unsubscribe from the service straight afterwards, so you don’t get charged in the future.