Five top credit cards for Christmas spending
With the festive season looming large, it's time to start shopping! If you plan to put Christmas on the plastic this year, check out these top credit cards for seasonal spending…
Following the tough economic conditions of the past 12 months, many Britons may choose to be frugal when it comes to present buying this Christmas.
However, for most people there will still be plenty of costs to take into account. From turkey and trimmings to extra travel expense, the season of goodwill can prove to be a real financial headache.
As the last couple of years have demonstrated, irresponsible credit card use and overspending can have very serious consequences.
However, all credit cards are different. The right ones, used in the right way, could actually make that festive spending burden a bit easier to bear.
Great for cashback
Cashback credit cards do exactly what they say on the tin: Every time you make a purchase using your card, you'll be credited with a small percentage of that money back.
If you're thinking about applying for a cashback card, you should be confident you can clear the balance, in full, every month. Any interest charges you face are likely to outweigh the cashback benefits you gain.
The American Express Platinum cashback card is currently one of the best around. In the first three months of spending, it offers users 5% cashback on all purchases (up to a £100 limit). After that, you can earn up to 1.25% cashback, depending on how much you spend.
The large initial cashback makes this a very good card to use in the run-up to Christmas. Just bear in mind that some retailers still don't accept American Express.
Great for rewards
Reward credit cards operate in a similar way to cashback cards, but your rewards generally come in the form of bonus or loyalty points to spend with specific retailers, rather than hard cash.
Because of this, different reward cards can be good for different people.
For example, motorists planning long journeys over the Christmas period may want to investigate the recently-released AA credit card. It offers reward points on all purchases and double reward points on motoring purchases, including fuel. These can be used to help pay for all sorts of motoring products and services, as well as certain insurance products and days out.
If you're a member of the AA you'll earn points twice as fast, and you can actually convert them into 1% cashback on any fuel bought using the card. What's more, if you're buying motoring, fuel or AA products, you won't be charged any interest on your purchases until December 2010.
Several high street retailers have also released their own reward cards. If you plan to stock up for Christmas at Tesco, for example, it might make sense for you to apply for the Tesco Clubcard credit card.
This card gives you five Clubcard points for every £4 you spend in the store and one point for every £4 you spend elsewhere. You can also use your reward points to pay for days out and restaurant meals too!
Great for a 0% loan
If you're tempted to borrow money to pay for Christmas, think hard about how much you really need to spend. Everyone's going to be tightening their belts this year, so you won't be on your own if you decide to cut back on the extras and live within your means.
If you're determined to put Christmas on a credit card, and you don't think you can pay it off at the end of the month, consider taking out a card that offers a 0% interest deal on new purchases. Once Christmas is out of the way, just make sure you clear the balance before the 0% period comes to an end.
One of the longest deals on 0% purchases is offered by the Tesco Clubcard credit card I mentioned above. It currently charges 0% interest on all new purchases for a full 12 months, and has a typical rate of 16.9% APR (variable).
Great for a debt-beating Christmas
If you're already paying interest on credit card debt, it could make financial sense for you to shift that debt on a card charging 0% interest on balance transfers.
That way, every penny you pay will go towards tackling your debt, instead of being swallowed up in interest charges.
The market leader in this field is the Virgin Money card, which offers 0% on balance transfers for 16 months. Just bear in mind that a 2.98% fee is charged on all transfers; and that after the 16 months, you'll be charged substantial levels of interest on any remaining debt.
Happy Christmas shopping!
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
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