2 savvy Xmas credit card strategies
Xmas is coming...
Buying presents for your family, partner and friends can be an overwhelming process. If you are using a credit card to purchase gifts, what strategy are you using?
3 reasons most of us use the plastic life saver:
1. To spread the cost efficiently over a specific period of time
2. To earn rewards for our spending
3. To enjoy extra protection on the goods we have bought
What should you use?
- 0% interest free credit cards - I am not a massive fan of funding your Xmas via plastic, as you can often find yourself paying off the debt until next Xmas...or the Xmas after that! But hey, for many of us there are limited alternatives, so I get it! The 0% interest free credit card is a fan favourite - these cards charge no interest on purchases for an initial period, which in the current market could be as long 31 months.
The catch: Pay off the entire balance before the 0% period ends, otherwise your interest rate sky rockets and you will get charged on any remaining debt. Notably, some cards even offer a 0% balance transfer for a specified period of time. Take a look at the below cards to wet your appetite:
Sainsbury's Bank Purchase Credit Card
Halifax UK Purchase Credit Card
Post Office Matched Credit Card
Rewards you say?
- If you don’t need to borrow money for Xmas and are sticking to your trusted debit card, this is amazing, however, you are missing out on some juicy rewards! Cashback credit cards reward you by giving you a percentage of your spend back onto your credit card. So, if you are spending £100's on gifts via your debit card, why not take a quick U-turn and use a cashback credit card to lighten the load and get an extra layer of consumer protection on your mum's new straighteners. What am I on about? Buying on credit can give you protection if your mum doesn’t like her straighteners, or if your dad's jumper doesn’t fit, compared with paying by cash or even debit card, under section 75 of the Consumer Credit Act.
The catch: The key is to pay back what you have borrowed at the end of the month. Many forget to do this and the interest charged demolishes any gain from the cashback. Here is one of my favourite cashback credit card at the moment. The below gives you 5% cashback and up to £100 for your first 3 months of card membership, with a £0 annual fee!!
American Express Platinum Cashback Everyday Credit Card
Cash is not the only type of reward on offer, as you can even grab airmiles and vouchers with many other credit cards on the market. Always do your research and read the fine print!
WARNING: Always remember that credit applications are recorded on your credit report - it doesn't matter whether they are successful or not! My advice here is to use an eligibility calculator, as making too many applications in a short space of time can hurt your chances of getting a loan in the near future.