How to make your credit cards pay
Saturday 10 January 2009
Britain's credit-card market is one of the most competitive in the world. Most cards have no annual fees, offer attractive interest-free introductory periods, and come with generous loyalty schemes. The downside is that they also charge hefty interest rates – typically between 15 and 20 per cent APR – meaning that they're an inefficient way of borrowing for any period of time.
However, if you use your credit cards wisely, there's nothing to stop you taking advantage of all the benefits while never paying the provider a penny in interest.
If you don't already have a credit card, it will now be tougher to get your hands on one than it was 12 months ago. That said, there are still more than 50 cards offering 0 per cent balance transfer deals for nine months or more – and the best of these offers 16 months interest-free. That means that if your application is accepted, you won't have to pay any interest on your current card debt for up to 16 months.
Although most cards usually charge a fee of about 3 per cent when you transfer a balance from another card, Ulster Bank offers a six-month interest-free balance transfer deal with no charge at all, while Barclaycard Platinum offers a nine-month deal with a lower fee of just 1.7 per cent.
If you have debt on one or more cards, balance transfers offer a great way to get yourself back on track. Be careful, however, not to use your card for any other transactions once you've transferred the balance (unless the card offers a 0 per cent deal for purchases as well), as you'll start paying interest on your new transactions immediately, and won't be able to pay off your newest debt until you have paid off the whole sum that was transferred when you took out the card.
If you don't yet have any credit-card debt and are thinking about making a big purchase, there are cards available that won't charge you any interest on purchases for the first few months. First Direct's Gold Card offers 0 per cent on purchases for a full year – although you have to be a First Direct current account customer to qualify.
Taking advantage of loyalty schemes
Not all credit cards have great loyalty schemes, but there are a few good-value ones out there that can make you money if you use them wisely. Some, such as the American Express Platinum Cashback card, for example, pay you back a small percentage of every purchase you make.
In the case of the Amex card, you'll get 5 per cent on all purchases for the first three months, and then up to 1.5 per cent thereafter, depending on how much you spend each year. Citi also has a generous cashback deal, paying you 3 per cent when you buy petrol at a Shell station, and 1 per cent on all other purchases.
Other cards offer useful rewards such as air miles. The Lloyds TSB Duo card, for example, pays you one airmile for every £10 you spend. The air miles that you accrue will eventually buy you a flight including taxes. You'll need to spend £15,000 on your card to get a return flight to somewhere in Western Europe.
If you're disciplined, cashback and other reward schemes can, in effect, be a one-way bet. Here's how it's done.
Do all your spending on the credit card each month, and put your salary into an instant access savings account to earn a bit of interest. Then, pay off the full balance on your card each month – but not until the last minute, so that you can maximise the interest on your salary. This will earn you a few extra pounds in interest and give you air miles, cashback or other rewards for simply doing spending that you were planning on doing anyway. And, as long as you always pay your balance in full and on time each month, it won't cost you a penny.
Finding the right card
Websites such as www.moneysupermarket.com and www.uswitch.com will help you to find the best deals on the market. However, in these credit-crunched times, the only people who will find it easy to get a new card are those with excellent credit histories and not too much other debt.
If that's not you, it's worth being a little more targeted when you select a card to apply for. Check your credit score by using websites such as www.creditexpert.co.uk or www.mycallcredit.com. These sites can also help to point you towards cards that you're more likely to be accepted for.
Although a card rejection won't show up on your credit rating, there will be a mark left every time you apply for a card. If your file shows that you've been applying for lots of different cards, providers may be less likely to accept you.
Crowd-to-let: How crowdfunding sites can give investors a slice of the property market for £500
Q&A: What’s the best way to invest for our baby?
Simon Read: 'Seven Families campaign offers an escape from financial and emotional distress'
After the election: What will Britain's financial future look like on 8 May?
General Election 2015: How you vote next week could affect your finances
- 1 Which country would be hardest to invade?
- 3 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 4 How the language you speak changes your view of the world
- 5 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
Indonesia executions live: 'Hysterical' families heard prisoners being shot dead by firing squad
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
EU exit would hit UK economy much harder than neighbouring countries, study finds
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...
Day In a Page
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park