Why you could get more from your credit card in 2013

Before you get dazzled by the 0% interest deals on offer you need to consider the right type of card for your circumstances.

14:55 13 January 2013

Your trusty credit card may have carried you through Christmas, but as providers continue to up the ante by offering longer interest-free periods and more competitive rewards deals, have you considered that the plastic sitting in your purse or wallet could be old news that's effectively losing you money?

 

But before you get dazzled by the 0% interest deals on offer you need to consider the right type of card for your circumstances. For example, are you looking to transfer a balance or do you need to spread the cost of a large forthcoming purchase?

 

You could even make money from your credit card through one of the many cashback and rewards deals. Get this right and you could get more from your credit card in 2013, so let's take a look at what's on offer... .

 

Best balance transfer card...

 

For some time now, the Barclaycard Platinum with Extended Balance Transfer card has sat top of the best buy tables in the above stakes, as it offers 24 months to clear any debt you transfer before you start to incur interest charges.

 

If you're transferring more than £2,000, the balance transfer fee has been slashed to 2.1%, but otherwise it's 3.2%. Once the 0% introductory period is up, the APR jumps to a representative 17.9% (variable) so beware.

 

Barclaycard also has its Platinum Balance Transfer Card, which works slightly differently but could be even more cost effective.

 

Gone is the balance transfer fee and with it the offer of 0% interest. Instead you can bag 36 months (yes, three years!) at an APR of just 4.9% (variable) representative. At lower than even the best personal loan rates this would definitely be worth considering over a debt consolidation loan.  After the three-year honeymoon is over though, the representative APR is 18.9% (variable).

 

You can read more about the deal with Rachel Wait's article.

 

... and why it could be better than the one your wallet

 

If you have an outstanding balance on an existing credit card, then there's a good chance that you'll paying upwards of around 17% APR and so you can immediately start saving money by moving the debt to a balance transfer card like one of those mentioned above.

 

And although the Barclaycard Platinum Balance Transfer Card doesn't offer 0% interest, the removal of the transfer fee and the fact that it offers a low rate for such a long period of time means that it could be one of the most cost effective for you.

 
Best money transfer card...

 

If your main objective is to pay off other expensive debt, the MBNA Platinum Credit Card is worth a look. It offers 22 months at 0% interest not just on balance transfers, but on money transfers too. This means you can have money from the provider paid directly into your bank account - a great option if you're either looking to make a large purchase or pay off some other more expensive debts.

 

However, you must make sure you factor in the associated fees. These stand at 2.85% for balance transfers and a wince-inducing 4% on money transfers. The representative APR which, once the introductory offer ends, leaps to18.9% (variable) of balance transfers and 20.9% (variable) on money transfers.

 

The AA Transfer Plus Credit Card is a good alternative as, although it doesn't offer an interest-free period, it does come with a standard low rate of just 6.9% on both balance and money transfers. The fee is also lower at 2%.

 

... and why it could be better than the one in your wallet

 

If you're paying interest on your current credit card balance, or have outstanding loans or overdrafts that you are looking to get rid of, paying 0% for 22 months or a low rate for life, is bound to be a lot cheaper. Just don't forget the fees involved!

 

Best reward card...

 

If you are a regular user of the plastic in your wallet and pay it off religiously every month, you may as well get something back for it with a card that offers rewards.

 

The NatWest YourPoints World Mastercard for example, comes with a pretty good rewards package that offers an initial 2,500 points for all new customers, who will then earn one point for every £1 spent on the card.  These points can then be redeemed through NatWest's travel partners, easyJet and eBookers as well as against brands such as Amazon, Boots and M&S.

 

The card also offers a reasonable period of 13 months at 0% interest on both new purchases and balance transfers, subject to a 2.9% fee. One this introductory period is up then the representative APR is 17.9% (variable).

 

... and why it could be better than the one in your wallet

 

Using a rewards card such as the NatWest YourPoints World MasterCard simply means you will get something back for behaving in exactly the same way as you do with the card in your wallet now.

 

There's also a host of cashback cards on offer instead.  Santander's 123 credit card offers up to 3% cashback, but does come with an annual fee of £24 that pushes the representative APR up to 22.8%.

 

Similarly, the Barclaycard Cashback Card comes with a £24 annual fee that makes its representative APR 24.8% - but it does offer up to 6% cashback in the first three months and a long term cashback rate of up to 2%.

 

Best new spending card...

 

If you are planning to make a large purchase, or even several small ones, but not pay off the balance for some time, the card in your wallet is not likely to be the best one.

 

The Tesco Clubcard Credit Card for Purchases however, will give you 16 months before its representative APR of16.9% (variable) kicks in. The card also comes with nine months at 0% interest on balance transfers, subject to a 2.9% transfer fee.

 

... and why it could be better than the one your wallet

 

The main attraction of this card of course is that it will not charge a penny of interest for 16 months on whatever you buy - can you say that of the current plastic in your wallet?
But better still, if you are a regular Tesco customer then this card also doubles up as a Clubcard, offering five points for every £4 spent in Tesco or on Tesco fuel and one point for every £4 spent elsewhere.

Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else. Contact: MoneySupermarket.com at Moneysupermarket House, St David's Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2013.