How to live in harmony with your credit card

For a happy, healthy relationship, it is important to pick someone who supports you and complements your personality.

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Your love life is not the only area where you need to choose your partner with care, though.

To make the most of your money, you also need to choose the right credit card for your individual needs.

The good news is, we’ve made this easy for you. Simply choose the statement that best describes your situation and read on to find your perfect match…

“I am worried about my credit card debt”

If you have credit card debts, a card offering 0% on balance transfers is a good option as it should allow you to stop paying interest – meaning you can pay your balance off more quickly.

The Barclaycard Platinum Card with Extended Balance Transfer, for example, offers 22 months at 0% subject to a one-off fee of 1.45% (usually 2.9%). Hurry though as the half-price offer ends on August 9, 2012.

It is important to clear your balance within 22 months, though, as the representative APR on the card is 17.9% (variable).

Other options include the Halifax Balance Transfer Credit Card, which also offers 22 months at 0% and charges a representative APR of 17.9% (variable), but has a higher one-off fee of 3.5%.

“I only pay the minimum every month”

MoneySupermarket calculations indicate that someone with a balance of £1,500 on a card with an average APR of 17.31%, would take a staggering19 years and three months to clear the debt if he or she made just the minimum repayments – that’s usually either 2.5% of the balance or £5, whichever is the highest.

Over that time, the cardholder would also pay a massive £1,590 in extra interest as a result of the low monthly repayments made.

If you can only make the minimum payment then, it’s still worth considering switching your debt to one of the 0% balance transfer cards described above.

Remember, though, that you risk losing the 0% deal if you miss a payment.

As the market leading deals are generally reserved for those with high credit scores, it is also worth using the MoneySupermarket  SmartSearch credit-profiling tool to find deals you are likely to qualify for without leaving a footprint on your credit file.

“I need to make some large purchases using my credit card”

If you are planning a spending spree, a card offering 0% on purchases is a good choice – especially if it rewards you for spending.

The Tesco Clubcard Credit Card for purchases offers an incredible 16 months at 0% on purchases, after which the representative APR is 16.9% (variable). It also comes with access to the Clubcard rewards points.

The American Express Express Reward Credit Card, meanwhile, also offers 16 months interest-free purchases. What's more, you will receive a £30 voucher that can be redeemed either online or on the high street in stores including Amazon.co.uk, Boots, House of Fraser, HMV, Marks and Spencer.

For those with less-than-perfect credit histories, meanwhile, there is the recently launched Capital One Classic credit builder card.

It offers 0% on purchases up until your November statement. However, because the card is aimed at borrowers with a low credit score, the card comes with a high representative APR of 34.9% (variable).

“I pay off whatever I can afford”

If you pay off whatever you can afford each month, this means that you are likely to carry at least some debt over.

A low-rate balance transfer card is therefore a good match for you too.

However, while maximum 0% balance transfer periods have jumped from 16 months in 2009 to almost two years today, the upfront fees you have to pay to benefit have also increased.

Depending how much you owe and how long you think you will need to pay it off, you may therefore be better off going for the fee-free Sainsbury’s Low Rate Credit Card at a representative APR of 6.95% (variable).

“I clear my balance religiously”

If you always clear your balance in full, your perfect credit card should be one that rewards you for spending.

Take the American Express Platinum Cashback card, offering 5% cashback in the first three months (up to £2,000) and 1.25% thereafter. Spending £1,000 a month on this card could save you £225 a year.

Other options include the Tesco Clubcard Credit Card (described above) and NatWest’s Your Points MasterCard offering a points system that can be used towards flights, holidays and branded products.

Whichever card you go for, it is essential to pay off the full balance each month to avoid getting stung by interest charges.

“I don’t like credit cards – I only like to spend what I have”

Prepaid cards, which can be loaded with money online or over the phone, can be used in the UK as an alternative to debit and credit cards.

You can’t slip into the red by mistake, and they can also be used as a valuable budgeting aid and to make overseas purchases securely and more cheaply than most credit cards.

Check out the cashplus Gold Activeplus card, which costs just £4.95 upfront and is then free for the first three months (after which domestic withdrawals cost 99p).

“I always seem to get stung with fees”

New research from the Post Office indicates that British holidaymakers will be hit with around £135million in unnecessary fees while abroad this summer.

However, you can avoid being stung for overseas spending by opting for a credit card that does not impose foreign purchase fees.

These include the Halifax Clarity Credit Card at a representative 12.9% (variable) and the Saga Platinum card (for over 50s only) with a representative APR of just 11.9% (variable).

Whether you are abroad or not, however, it is a good idea to only withdraw cash on your credit card when you really need to as cash advances are generally charged at a much higher rate of interest than standard purchases.

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

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