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Make your Credit Card work for you

19 January 2012

Get your personal finances in shape this year by finding the best credit card deals on the market. Consider what you want from your card and shop around for the right card for you. Following a season of heavy spending, many people might be looking to consolidate their debts into one easy-to-manage card.

If you’re thinking about taking out a credit card, luckily for you we’ve compiled a list of the best credit cards for this year.

Doing a small amount of research can go a long way, and it’s important to note there are a few steps you can take to improve your credit score before applying for a new card.

Improve your credit history

Firstly, check your credit report for any errors. When applying for a credit card the information that is held in your credit file is crucial to determining how successful you are. There are some simple steps you can take to improve your credit history. For example, paying your bills on time, every time shows the lender that you are able to manage your finances effectively. 

You should take the time to close any unused credit cards and accounts you no longer use as lenders often look at the amount of credit available to you across the board, rather than the amount of credit you can have on a single account. 

Once you’ve done that you can think about applying for a credit card. Compare credit cards with Money Expert.

Best card for purchases

Nationwide has recently launched a brand spanking new market leading credit card which offers a lengthy 18 month period at 0% on purchases. The Nationwide Select Credit Card also allows users to make interest free balance transfers for up to 17 months. Thereafter, a transfer fee of 2.95% applies.

The only catch is that you must be a Nationwide current account holder to be eligible for it. The typical APR on this account after the promotional period is also relatively high at 12.9%, depending on the customer’s individual circumstances.

It could be ideal for making big purchases which you can pay off before the interest free period ends. However, for those who are not paying over £750 into a Nationwide current account, there are other options.

The Halifax All In One MasterCard offers a slightly less 0% interest period of 15 months on purchases and also has a 17.95% rate thereafter.

Best card for rewards

If you plan on using your credit card quite often but with small purchases rather than for the occasional big purchase, it could be worth taking out one with plenty of rewards. The AA Rewards Credit Card works on a system of points. The more you spend on the card, the more points you can earn.

With these points you can use them for a range of AA products such as breakdown or home insurance. Alternatively, you could use them to get cash back, high street vouchers, spa days and other experiences. For example, if you spent £60 on motoring costs every month on your card, you could earn nearly £15 on high street shopping vouchers. The card also has 0% on purchases for 10 months, 0% on balance transfers for 12 months and a representative APR of 16.9%.

Like many other leading credit cards, Play.com also offers a card that allows you to collect points whilst spending. You could earn 2 play points for every £1 you spend at the entertainment website. You can earn 1 play point for every £1 you spend elsewhere. The card is only available to those over the age of 23, earning at least £20,000 a year with no recent credit defaults. The card has a representative rate of 16.9% , 0% balance transfer for 6 months and 0% purchases for 9 months.

Best card for cash back

If you’d rather earn cash than points, a cash back card could be ideal for you.  Capital One Bank World MasterCard offers a massive 5% cashback on purchases during your first 3 months of opening the card, but the maximum return will be £100. The only catch is that there is no 0% promotional periods for purchases or balance transfers. Both are set at a staggering 19.94%!

After the 3 month period you can get 1.25% cashback, but it is unlimited.

Best for 0% Balance Transfer

If you have racked up a serious amount of Christmas credit or even just a little more than you had anticipated, you might want to consider taking out a 0% balance transfer credit card. This allows you to combine several credit balances all on one single card. By having all your credit debt in one place, you can take better control of your finances.

With interest rates remaining so low, many banks and lenders are offering cards at zero percent. As the base rate has remained low for so long, there are now many cards on the market which offer 0% balance transfers for over 20 months.

The Barclaycard Platinum Credit Card has 0% interest on balance transfers for two years. There is a 3.20% handling fee when opening the account and an interest fee of 3.20% after the promotional period.

Barclays also offer a Platinum Credit Card with 22 months, 0% balance transfer with a lower fee of 2.90% thereafter. The 3.20% handling fee still applies. Both cards have a representative APR of 17.9%.

  • Even though the rewards scheme has been withdrawn - the credit card provider should have issued the customer with a new card. He needs to contact them to discuss.

    Jimmy Li  |   Money Expert - Warrington  |   24 Jan 2012

  • I have a GM credit card with an outstanding balance.By using the card you obtained points which you could then offset against the cost of a new Vauxhall.This scheme has now stopped and the card cannot be used accordingly.When I went to transfer the balance to a cheaper card I discovered that the card had expired and the balance could not be moved.Is there anything I can do or as I suspect am I stuck with the current position.

    David Jones  |   Cardiff  |   24 Jan 2012

  • One of the key things on lender scorecards is your current available credit that you have against your income. If the ratio is too high - future credit card applications may be declined. Therefore it does make sense to close old credit card accounts.

    MoneyExpert  |   Newton-le-Willows  |   20 Jan 2012

  • All good info. What I would like to know when you get a balance transfer to another card is it better for your credit rating to then close your old credit card balance or leave it open? I had one credit card and did a balance transfer which left £1 on my old credit card, is it better to closed the account as I noticed when I applied for my new one it asked how many credit cards I had so if I keep the original one open will this count against me if in 13 months time I transfer my balance again? Thanks, Dean.

    Dean Burke  |   Bristol  |   19 Jan 2012

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