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Four steps to savvy spending this Christmas

Four steps to savvy spending this Christmas

Category: Credit cards

Updated: 23/11/2012
First Published: 22/11/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Hitting the high street this time of year can be a stressful experience, leaving our bank balances feeling as drained as our patience.

Arming yourself with a suitable credit card can help make a difference when covering the extra expenditure. Who knows, you may even receive some cashback on your shopping!

Here are four quick tips on how to make credit cards work in your favour this Christmas:

1. What is the best card to cope with extra spending?

Credit cards offering 0% interest on purchases are a great way to avoid paying any interest on your festive spending.

These cards do not charge you interest for an introductory period, so can be very handy when making several big purchases. The key is to pay off the balance before the introductory period expires.

Always check out the duration of the interest free period as they will vary from card to card and make sure you can afford to repay the balance before the interest free period ends. If you think you may need longer to pay off the balance, a card with a longer introductory period may be best for you.

Never use a credit card to make cash withdrawals, as different rules will apply to when making purchases in store or online.

Interest is often much higher for withdrawing cash and will be charged immediately. A fee will also be applied for making withdrawals on your credit card.

2. Are cashback cards a good idea?

If you can afford to pay your balance off in full, then cashback cards can work to your advantage.

These cards, essentially, reward you for each spend you make, so the more you spend on your card, the more cashback you receive.

Some cards also offer different cashback rates for different types of spending.

For example, you could earn 1% cashback for supermarket spending and 3% for using the card at a petrol station.

If you are unable to repay off the total balance each month, then any interest accrued will cancel out any cashback benefits, which may be removed altogether by the provider.

Fees apply to cashback cards, ranging from £25 up to £100.

3. What about reward cards?

Reward cards offer points for each spend you make, rather than cash, which can be put towards shopping vouchers. Some cards offer double and even triple points for spending in selected retailers.

As with credit cards you must be sure you can pay off the whole balance each month in order to benefit from a reward card.

4. Do credit cards offer me any protection?

Making purchases on a credit card will mean added protection in the event of either your card being stolen or the retailer going out of business.

If your credit card is lost or stolen, you are eligible to reclaim money from the credit card provider within a specific time, usually ninety days.

Also, if the company from which you make a purchase goes out of business and you are unable to liaise with them regarding the issue, you are still entitled to claim you money back from the credit card company.

For more information, check out our guide on consumer protection

What Next?

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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