moneysupermarket.com credit card expert Steve Willey chats with site editor Clare Francis about how paying your card in full each month can lead to rewards and benefits...
Video Transcript
Steve Willey, head of credit cards at moneysupermarket.com, is with me today to talk about the best card options for those who clear their balance in full every month.
Steve, most articles you read about credit cards focus on 0% deals and low-interest rate products, those that are good for people who carry a balance on their card and can't repay in full. But about 65% of credit card users do clear their balance in full. So what's the best option for them?
Steve Willey: Well if your one of the lucky customers who can actually clear your balance in full then there are a number of rewards or cashback cards available to you, so you can maximise your spending and get a reward on the back of it.
Clare Francis: And how do, actually, these sort of cards work?
Steve Willey: Well there are a number of options available, some cashback cards pay you directly back on to the card that you have been using so it rolls into your next month, others pay you a cheque annually which comes to your home or reward points that you accrue for you spending which you can then rebate towards some form of a catalogue, generally for travel or shopping.
Clare Francis: And can you give us an example of some of the best deals that are available at the moment?
Steve Willey: Yes, there are 3 really good products out there at the moment:
The Shell Citi MasterCard, that has a 3% rebate against all Shell spending at petrol stations and you also get up to 1% cashback on all other shopping that you carry out.
American Express platinum has a 5% cashback for the first 3 months and 1.5% thereafter. The thing to remember with American Express is that it is not accepted in every store in the UK so its always best to have a partner card such as a MasterCard or a Visa so that you actually maximise your cashback opportunities.
And then finally MBNA Platinum Rewards Cards is very flexible, you earn points but you can choose to rebate them against, travel or shopping or even cashback itself.
Clare Francis: So a card that rewards you for spending does sound quite an attractive proposition, but these products are not the best for everyone are they?
Steve Willey: Well there's always a catch and the thing to ensure is that you clear your balance in full every month and that you avoid paying any interest. Most reward cards, because they cost money to run have a higher interest rate generally between 15.9% and 18.9% so one months interest could out weigh the actual cashback or reward you earn throughout the entire year.
Clare Francis: And how has the credit crunch affecting the availability of such deals? We're hearing that lenders are becoming more choosy about who they are offering credit cards to many credit card providers are becoming more choosy about who they will lend to. Is it having an effect on the availability of these sorts of deals?
Steve Willey: Well lenders are becoming more choosy and we have seen some examples of that in the press recently, but the thing to insure is that the cards that you have in you wallet are the cards you actually use, if you don't use them I would recommend closing them or your not going to use them in the certain future I would recommend closing them down and only use card products that are available, that you can maximise and make use of today.
Thanks very much Steve
So if you do clear your balances in full then get a card that rewards you for spending, but these cards aren't the best option if you carry a balance every month and can't afford to pay you debt every month. If this is you then you are much better going for a card with a low interest rate deal because the benefits of cash back or loyalty schemes will far out weight the interest you will be charged.
