Be card sharp

The credit card tricks that WILL save you money

1. Even if you don’t need to borrow money, get a credit card. Without one you’re unlikely to be able to hire a car overseas; you’ll miss out on valuable Consumer Credit Act protection; and, if you don’t have a credit card, it may affect your credit rating.

2. That doesn’t mean you should run up big bills on credit cards. They work best if you miss out on the ‘credit’ bit and use them as a way to delay payment or to collect rewards.

3. If you don’t need to borrow money, choose a card which rewards spending either in cash or in vouchers. Current good deals include cards from Sainsbury's Bank (which give Nectar points) and Tesco (Clubcard). Moneyfacts has up-to-date lists of top deals.

4. For this card trick to work you MUST pay the balance back in full every month (set up a direct debit to that effect). Otherwise any benefit you get will be outweighed by the interest you pay on your debt.

5. If you need to borrow, go for a card with the lowest APR (annual interest) you can get. Watch out if your credit record isn’t spotless: you won’t necessarily get the APR on offer.

6. You can get 0% cards at the moment which means you pay no interest on your shopping as long as you make at least the minimum payment each month.

7. Many credit card firms also offer 0% on balance transfers - you can get deals lasting several years at the moment. These are a good idea if you’ve got an outstanding debt on another card. BUT you will often pay a transfer fee of around 2.5%-3% to move money over. To make 0% balance transfers work, use the free period to repay all your outstanding debt and DON’T spend on it. Hide the card so you’re not tempted.

8. All good things come to an end, just like the special 0%. Then you have to pay interest. Make a note of the expiry period so you can move elsewhere once the deal finishes.

9. If you can, pay more than the minimum monthly payment. Often this is set at 5% or less – so you’ll take ages (and pay huge amounts of interest) if you stick to the schedule.

10. NEVER take out money from a cash machine on your credit card. See our guide to holiday money here. Even if you pay your bill off in full, you’ll usually still pay interest on your cash withdrawal and there could be a cash withdrawal fee too.

More stuff:

  • Go to a comparison site such as Money Supermarket here  to find the best current deals.
  • More top tips on credit cards at Money Advice Service here
  • Are you having money troubles? Good advice from Citizens Advice here.

 

Last updated 2 February 2018.