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Top credit cards for shopping and cashback
Top credit cards for shopping and cashback
It's that time of year again - a full two months before Christmas and advertising breaks are already adopting Yuletide themes.
Despite this new age of austerity, Brits - especially families with young children - are still prepared to splurge huge sums in an effort to have the perfect festive season.
For example, my wife and I will be lucky if we spend less than £1,000 on Christmas food, drink, gifts, decorations and parties.
Christmas on credit
Of course, any discussion of Christmas must include how to pay for it. Ideally, the best way to fund each Noël is to use your savings. For instance, to raise £1,000 for Christmas 2013, you could save £83.33 a month over 12 months -- and then pocket any extra interest you've made on this cash.
Then again, credit is a fact of modern life and, indeed, millions of Brits are ready for yet another 'Christmas on credit'. While many financial pundits warn against spending on credit cards, I take a different view.
To me, credit cards are a double-edged sword. Used recklessly, they are an expensive and even dangerous way to get into debt. On the other hand, used sensibly, they offer a wide range of attractive benefits -- and even interest-free credit -- to clever card players.
Play your cards right with 0% deals
By playing your credit cards right, you can even pay for this Christmas over 2013 and 2014, but without paying even a single penny in interest.
The trick to becoming a Christmas card sharp is to choose from the full deck of cards wisely. Your goal should be to spread the cost of your festive purchase over the longest possible period, by taking advantage of the most generous 0% deals in the market.
By spending on a 0% on new purchases credit card, you can enjoy interest-free credit for between six and 16 months - the longer, the better. These cards give you a valuable breathing space to repay your Christmas spending over a year or more, completely interest-free.
All you have to do is be sure to repay your entire balance in full before your 0% deal ends. Otherwise, you'll start to pay interest at the full standard rate for purchases, which will be over 15% a year.
The top five 0% cards for purchases
To help you choose the right 0% deal, here is a list of the five longest 0% cards for purchases on the market right now. Apply for one of these today and your card will be ready to use in the November and December shopping frenzy.
|Issuer/card||0% deal||Typical APR||Other details|
|16 months||16.9%||Earn Tesco Clubcard points on all spending over £4|
|15 months||15.9%||Earn M&S reward points on all spending|
|14 months||18.9%||Gives access to exclusive music shows and live gigs|
|14 months||18.9%||Also offers 0% for 14 months on balance transfers (2.9% fee)|
As you can see, each of these cracking credit cards offers interest-free credit of at least 14 months on purchases. In other words, they give you until early 2014 to pay off any spending over Christmas 2012.
One word of warning: while these cards are perfect for UK shopping, never use them abroad or withdraw cash on them. Otherwise, you'll end up paying hefty fees and sky-high rates of interest.
Earn as you spend with cashback cards
If you don't need to borrow and prefer always to pay off your monthly balance in full, then a 0% card won't be for you. Instead, your best bet is grab free cash - or substantial reward points, vouchers and bonuses - by shopping with a cashback credit card.
For example, my cashback card pays me a yearly rebate of 1% of my spending. Earlier this year, I got roughly £120 credited to my account simply for using my card to pay for the biggest to the smallest purchases. In effect, I'm being paid to spend, which proves that there is such thing as a free lunch.
The top five cashback cards
|Issuer/card||Cashback||Typical APR||Other details|
|Introductory 5% for three months, then 0.5% to 1.25%||18.5%||Yearly fee of £25|
|Introductory 5% for three months on up to £1,000 a month, then 1%||17.9%|
|Introductory 5% for three months on up to £2,000, then 0.5% to 1.25%||19.9%||Limited offer until 31/01/13|
|Introductory 5% for three months, then 0.5% to 1.25%||19.9%|
|1% in supermarkets, 2% in department stores and 3% on fuel/train fares, capped at £300 a month||22.8%||Yearly fee of £24|
The first four cards in this table offer bonus cashback of 5% in the first three months of use, making them ideal for spending both at Christmas and in the January sales. However, American Express cards aren't as widely accepted as MasterCard and Visa, so these may not be your first choice.
Also, the first Amex card and the Santander card both charge yearly fees, so I'm not keen on them. Py pick of this particular deck is the Sainsbury's Bank Cashback Credit Card MasterCard.
Extra rewards and free legal protection (Section 75)
When taking your credit cards shopping, be sure to take your reward cards with you in order to earn extra points, vouchers and special offers. The three most popular reward cards are the Tesco Clubcard, the Nectar Card and the Boots Advantage card. To be safe, keep all three in your purse or wallet and use them to claim rewards worth an extra 1% or more of your spending.
Finally, spending on credit cards offers free legal protection known as Section 75 cover, but debit cards don't. This extra consumer protection means that I'll be paying for all my Christmas spending this year on my credit card.
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Personally I got an amazon mastercard. It basically works out at 1% cashback on all purchases, except those made through amazon which are 2% cashback.
For me that's a great deal, because I already buy the majority of my stuff from Amazon as it is. There's no maximum spend a month (except your credit limit) for points, there's no "hey we'll give you a great rate during the time it takes your card to arrive, and then lop it to 10% of the original rate"
Obviously it's not that great if you don't use amazon, but for those who do it's worth looking in to.
was I dreaming or are there still investments like that? I own a rental property and wonder if selling would net me more income.
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