10 benefits of using the right credit card

There was a time when a credit card offered little more than the opportunity to pay for something at a later date, while potentially paying interest for the privilege. These days, however, there’s a whole range of different options available and seeking out the most appropriate for you can make a real difference. Here’s 10 ways you can profit from using the right plastic.

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1. Get money off your weekly shop

Many big retailers have made inroads into the world of personal finance, and now offer credit cards that are designed to promote loyalty to their stores.

For instance, if you regularly shop at Sainsbury’s, you will net yourself 10 Nectar points for every £1 you spend on a Sainsbury’s Nectar Low Rate Credit Card for the first three months. Once the three months is up you’ll earn four points for every £1 spent in Sainsbury’s – that’s twice the amount of points you’d earn using a standard Nectar loyalty card. Furthermore, using the card for any purchases outside Sainsbury’s will earn you one point for every £5 spent.
 
Similarly, the Tesco Clubcard Credit Card for purchases will reward you with five points for every £4 you spend in Tesco stores (or on its forecourts) and one point for every £4 you spend elsewhere. This means you’ll be earning more than the standard ‘1 point per £1’ ratio offered by a standard Clubcard and you can be racking up points even when you’re not shopping at Tesco. 

You can redeem loyalty points like these against the cost of your shopping – perfect for the costly lead up to Christmas.

2. You can fly for free

If travel is your thing, choosing an airline credit card could bag you a free flight.

If you’re a British Airways faithful, look at the American Express British Airways Premium Plus card. It will bung 18,000 Avios on your card – easily enough for one return flight to Rome – as a welcome bonus, so long as you spend £3,000 in the first three months. You will then earn 1.5 Avios for every pound you spend thereafter, and a higher rate of three Avios per pound if you spend with BA. However, the card comes with a £150 annual fee.

If you prefer Virgin, the Virgin Money Atlantic Black Credit Card comes with two cards – one American Express and one Visa. Virgin will load 6,000 Flying Club miles on the first purchase you make with the first card (so long as it’s within 90 days). You will then earn two miles for each £1 spent on the American Express card, and one mile for each pound spent on the Visa credit card. The annual fee is a collective £140.

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3. You won’t have to pay interest on debt

Credit card interest is expensive but there’s no need to pay it at all. Transfer your debt to a card with a different provider and pay 0% on it for an agreed period.

Barclaycard’s Platinum Credit Card with Extended Balance Transfer for example, offers a record-breaking 28 months at 0% interest on balance transfers – meaning you have over two years to pay off the balance without worrying about interest. Up until September 30, the card charges a transfer fee of 2.99% but it will rise again to 3.5% in October.

RBS and NatWest are hot on Barclaycard's heels as their Platinum credit cards now offer 27 months at 0% interest on balance transfers and come with a reduced balance transfer fee of 2.64% - down from 2.99%. Both cards also come with six months interest-free on purchases, after which they'll jump to the standard representative APR of 18.9% (variable).

If you’ve a larger balance to transfer you may want to pay a smaller fee – but this will be at the price of a shorter 0% window. Lloyds Bank Platinum Credit Card for example, currently offers 15 months at 0% interest on balance transfers subject to a fee of just 0.8%. For a full range of balance transfer credit cards, click here.

4. You can spread the cost of a purchase without paying interest

So long as you are organised, the right credit card will allow you to spread the cost of a large purchase without paying interest at all. The Tesco Clubcard Credit Card for Purchases, which is mentioned above, also offers 0% on purchases for 18 months. It reverts to a representative APR of 16.9% (variable) once the 0% interest period ends so make sure you clear your debt by then. For more 0% purchase credit cards, click here.

5. You can get paid for spending

This may sound too good to be true but you can actually earn money as you spend on your credit card, thanks to the range of cashback cards currently on the market.

Santander’s 123 credit card is one of the most rewarding as, you’ll get 3% back when you spend on fuel, National Rail and Transport for London, 2% back on department store spending and 1% cashback at supermarkets. There’s no annual fee for the first year and cashback is paid back on to your card annually. The American Express Platinum Cashback Credit Card is another option as this offers 5% cashback for the first three months, and 1.25% thereafter.

6. Spend overseas safely and cheaply

You may not be aware but when you use your credit or debit card in a foreign country, there’s a good chance you’ll be charged an extra ‘foreign transaction fee’ of around 2.75%. Pick the right credit card, however, such as the Halifax Online Clarity Credit Card or the Post Office Platinum Card, and you make fee-free purchases across the globe.

You may still be charged for withdrawing cash from an ATM though – and interest will be charged at a higher rate with the clock ticking from as soon as you have it in your hand – so it’s best to steer clear of this altogether.

7. Get a season of football interest-free

Football season tickets are expensive and so if you’re looking to defer the cost by sticking it on your credit card, the last thing you want is to pay interest on it too. It may be worth paying for your season ticket with a football credit card; not only will this give you the whole season to pay off your season ticket without paying interest, the cards also often come with club shop discounts and competition offers.

8. Manage your business cash flow

If you’ve started up a small business then cash flow can be a right headache, but a business credit card can help with this as it can be used to buy necessary supplies or stock. And using a business credit card instead of a personal one means you’ll also be able to build up the credit profile of your business.

9. Bump up your credit score

If you’ve no credit history or your credit file has been damaged in any way, one of the quickest ways to rebuild your profile is to do your spending on a credit card and pay off the balance in full at the end of each month.

Cards such as the Aqua Classic, Capital One Classic Platinum and Aquis Visa are all designed for credit building purposes but it’s extra vital you pay your balance off at the end of each month as interest rates are high on these cards.

10. Get help when you’re busy

If you’re a high-flying, always on-the-go high earner, then choosing the right credit card can offer benefits above and beyond interest-free periods or cashback – it can actually help you manage your hectic day-to-day life.

Cards such as the Capital One Aspire Elite offer a free concierge service that promises to take the legwork out of making reservations or even buy the perfect gift. Unfortunately, what it can’t do, is bring coffee to you at your desk.

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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