Buy now pay nothing for 18 months

MANY of us will rely on plastic to help us cover all our Christmas costs, but if you do plan to pay this way, finding a credit card with a lengthy 0% introductory rate on spending should be a priority.

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The good news is that it is now possible to defer interest for a massive 18 months with the new British Airways Premium Plus American Express card.  But as with many of the most generous offers, it comes with a catch - in this case a hefty £150 annual fee.

However, there are plenty of great alternatives, so here we take a look at who the British Airways card is likely to suit, and some of the options for those who don’t want to pay an annual fee.

What’s on offer

The British Airways Premium Plus card offers the market-leading rate on purchases, enabling cardholders to put off paying any interest for 18 months.

The card also gives you 6,000 Avios points when you first join and you can then collect 1.5 Avios points for virtually every £1 you spend on top of that.

Avios points have replaced Airmiles and have been merged with the British Airways Executive Club and Iberia Plus frequent flyer programmes.

You’ll also get double Avios points when you spend using the card on BA flights and holidays.

After the introductory period finishes, the card has a representative annual percentage rate (APR) of 19.9% variable, but once you factor in the £150 fee, this shoots up to a steep representative APR of 50.1% variable.

However, if you are planning some major purchases over the next few months, and are a regular traveller who will be able to make the most of the perks this card comes with, then this deal may be worth considering.

But if you won’t use the rewards on offer and are confident you can pay off what you owe within a slightly shorter timeframe, then you should consider some of the other purchase cards which are currently available.

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Alternative options

Among the best alternative cards for purchases are the Marks & Spencer Credit Card and the Tesco Clubcard Credit Card, both of which offer 0% on purchases for 15 months.

Neither of these cards has an annual fee, but you’ll have to make sure you pay off your debts before the interest-free period ends or you’ll be hit with a representative APRs of 15.9% and 16.9% variable respectively.

Like the BA card, both of these cards reward you when you spend. With the M&S card, you earn one point for every £1 spent at M&S and one point for every £2 spent elsewhere.

The Tesco card gives Clubcard points at a rate of one point for every £4 spent.

The Barclaycard Platinum with purchase card is also worth considering, again provided you are confident you can pay off any spending within the 14 month 0% introductory period.

After that, it has a representative APR of 18.9% variable. This card also offers 14 months at 0% on balance transfers, but only if you move any debts over within the first 60 days of opening the account and you will be charged a 2.9% transfer fee.

You’ll also qualify for Barclaycard Freedom which is a rewards scheme, enabling you to earn 'reward money' when you spend on your card at certain retailers.

Halifax’s All-in-One credit card similarly offers 0% for 13 months on new spending and balance transfers, and after that, the card has a representative APR of 17.9% variable.

Halifax card holders receive special offers including discounts on top UK attractions as well as on hotels, travel, shopping and up to 50% off dining.

Virgin also offers 0% for 13 months on purchases and balance transfers, and as a cardholder you are entitled to discounts on Virgin products holidays and experiences.

Balance transfers made onto this card are subject to 2.89% fee, while the Halifax card has a 3.00% handling fee.

Both the NatWest YourPoints World MasterCard and the Royal Bank of Scotland YourPoints World MasterCard are also worth a look.

These cards offer 0% for 13 months on purchases and balance transfers and enable you to collect reward points when you spend, with new customers clocking up 2,500 bonus points when they take out the card.

After that you earn one point for every £1 you spend whenever you use your card and you can exchange your points through NatWest and RBS’s travel partners easyJet and ebookers.com, or put them towards vouchers for shops such as M&S, Amazon.co.uk and Boots.

After the 0% introductory period ends, both cards have a representative APR of 17.9% variable.

Finally….

Whichever card you choose for your spending, make a note in your diary of when the introductory period ends and try to pay off what you owe by then, otherwise you could end up paying for Christmas 2011 far into 2023.

For example, someone with a balance of £500 on a card with an average APR of 18.12%, making only the minimum repayment of 2.5 per cent each month could take a massive 11 years and 8 months to clear their debt, forking out £477 in interest payments in the process.
 
Kevin Mountford, head of banking at Moneysupermarket.com, said; “The decision to use a credit card shouldn't be taken lightly and careful budgeting is essential to ensure people can pay off their debt quickly, or they could be left paying for Christmas 2011 for many years to come."

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 2011.

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