Five top credit cards for your Christmas shopping
Everyone spends a different amount when it comes to Christmas shopping, and some of us are good at budgeting for it throughout the year.
But if you know you haven't got the money set aside, or if you would rather not dip into your savings, then using a credit card may be your preferred option.
The best type of credit card for spending is one with 0% interest on card purchases. Many companies offer this for an introductory period, usually between 10 and 18 months, so be sure to note in your diary when the offer is due to run out.
There's no point in having interest free credit if you fail to pay it off in time and are then charged an APR of upwards of 15%.
If you think you won't be able to pay off the debt within the offer period then you should consider spending less in the first place, or transferring the remainder to a 0% balance transfer card.
However, remember continually applying for new deals can be an exhausting process and if you are refused it can affect your credit rating.
Here are five of the best cards on the market for Christmas credit:
Tesco Clubcard Credit Card
This card offers 0% on purchases for 13 months and then reverts to 16.9% APR. It allows you to collect clubcard points every time you use it for purchases, not matter where you use it or what you buy. For every £4 spend you receive one Tesco Clubcard point. It also offers 0% on balance transfers for the first nine months. After this offer period it reverts to 18.26% APR on balances. There is a 2.9% fee on transferred balances.
Sainsbury’s Credit Card
This card offers 0% on purchases and balances for 12 months. Once the offer period ends the APR for both purchases and balances is 15.94%. There is a 3% fee for transferring balances. The offer only available to active Nectar cardholders.
For non-Nectar cardholders there is a card available with 0% on balances and purchases for 10 months, which then reverts to 15.9% for both after the offer period. Again there is a fee on transferred balances of 3%.
Barclaycard Platinum with Purchase
With this card you will not be charged interest on either purchases or balance transfers for 12 months, there is a 2.9% fee for balance transfers. After a year the APR for both purchases and remaining balances will be 18.9%. No transfers are allowed from other Barclaycards.
MBNA Dual Card
This card is also interest free on both purchases and balance transfers for the first 12 months, but after the offer period the APR is a slightly higher 18.9% on purchases and 21.9% on transferred balances. There is a 2.98% fee for balance transfers.
One key benefit of this card is a positive rather than negative payment hierarchy which means any money you pay towards your bill will go towards the most expensive debt first. No transfers are allowed from other MBNA or Virgin cards.
AA rewards credit card
This offers 0% on purchases for 10 months and 0% on balances for 12 months. After the offer periods the APR for purchases and balances will return to 16.9% and there is a transfer fee of 3% on the balance. Those who drive a lot might find this card particularly useful as you can earn rewards from the money you spend on fuel and other motoring services. Read the full terms and conditions for further information.
MAKE SURE: Balances are transferred within the first 60 days in order to take advantage of the introductory offer.
WARNING: Do not use your credit card for cash withdrawals from an ATM. In most cases the interest on such transactions is well over 20%.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Moving money from one account to another, whether switching bank accounts or more likely transferring the outstanding balance on your credit card to another card that charges a lower – or 0% – rate of interest. Some card providers may charge a transfer fee that can be a percentage of the balance transferred.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.