Most of the big stores groups offer customers a store card which allows you to buy now but pay later. Often these stores also offer a discount on your purchase as an extra incentive to take one out. And it can be tempting to splash out on the latest designs whether it’s Gucci or TopShop.
But before you go on a shopping spree which would put even Wayne Rooney’s girlfriend to shame make sure you are not making a fashion disaster when it comes to credit card deals.
Don’t become a fashion victim with store cards
It is all too easy to be persuaded to sign up to a store card but unless you pay off the balance within the interest-free period they are almost never a good deal.
Some store cards charge interest rates of as much as 30% which is up to double the rate charged by most credit cards. It means that if you spend £1,000 you’ll have to pay £300 in interest.
Also some cards will charge you interest from the date you buy if you do not pay the balance off in full. It is now generally accepted that credit cards with low interest rates are a much better deal than store cards.
Store cards are worth taking out if you pay off the balance as soon as possible and take advantage of the discounts.
Shuffle the cards to be a fashion hit
There’s almost as much choice among credit cards as there is on the high street. The ones to look out for include zero per cent balance transfer cards and zero per cent purchase cards.
These size zeros will do you good if you use them right. A zero per cent balance transfer will allow you to swap debts and then clear them or reduce them without paying interest.
A zero per cent purchase card means you can splash out and pay off the balance over time without incurring interest. However the trick is always to keep an eye on the introductory period – that’s the amount of time you have before the rate rises again. If you pay off during that time then you will not pay interest but if you don’t you will have to pay interest.
It’s also worth looking out for cashback cards – these are ones which will give you money when you spend. Generally they pay one per cent or so of the total spent on your card. They’re worth taking if you will pay off your balance straight away.
Another one to watch is reward cards – that is cards which earn you points or rewards such as Air Miles for everything you spend.
The insider guide on what not to wear in your wallet
Standard interest rates – Watch out as these can be very high. Providers will lure you in with a very low introductory rate which then jumps up to nearly 20 per cent in some cases after the period finishes.
Fees – If you’re thinking of being smart and transferring your debt to a new credit card, make sure you check the small print as most providers charge a transfer fee to do this. Maximum fees now go as high as three per cent.
Taking out cash – Whether you’re abroad or in the UK, if you want cash from your credit card, you’ll have to pay. So try to avoid it at all costs. You’ll pay high interest from the moment you take out the money – and as there are so many ways to pay for things these days, this really should be a last resort.
Find a card to suit your style
Credit cards really can be your flexible friends if you play by the rules and choose the right options.
If you play your cards right they offer many advantages – free credit, cash back, protection against fraud, insurance against damage to your purchases – essential if you are likely to spill red wine down your new Vivien Westwood dress – and even discounts.
There isn’t much to choose from between the cheapest credit cards, so work out what you want from a card.
Price isn’t the only factor. Do you need a long interest-free period to pay off a large balance? Or are you looking for a card that allows you to purchase new things without paying interest? Or is customer service more important to you? Can you pay balance transfer fees up front?
All these features and more must be considered. MoneyExpert.com is an independent financial comparison service that looks into every aspect of credit cards, including providers’ customer service records. It’s a good place to start to ensure you get this seasons best deals.