If you want to spread the cost of Christmas, or get rewarded for your spending and enjoy extra protection, then a credit card is a great way to pay, providing you can afford to repay your balance in full before interest charges kick in. And now is a good time to apply, as you will have plenty of time to get hold of your card before the festive season.
0% purchase credit cards
If you haven't set aside some cash to help cope with the cost of Christmas a 0% purchase credit card is a great tool to have in your wallet.
These cards don't charge any interest on purchases for a set period, allowing you to pay off your debt in more manageable chunks.
The table below shows the longest lasting 0% cards on offer right now.
0% period for purchases
Tesco Bank Clubcard Credit for Purchases Mastercard
MBNA All Round 30/30 Credit Card Visa
As you can see, Sainsbury's Bank has just pipped its competitors to the post by offering the longest-lasting deal with 32 months to clear what you spend over the festive period before interest kicks in.
However, while the length of the 0% period is important it's worth investigating what other benefits a 0% purchase card has, as sacrificing a month or two could get you a better offer overall. For example, on the Santander Everyday Credit Card you'll get Retailer Offers. This gives you five welcome cashback offers ranging from 5% to 25% at a range of popular retailers, which will be tailored to you once you sign up.
The Sainsbury's cards offer up Nectar points, but if you're not a regular shopper at Sainsbury's you can earn Clubcard points with the Tesco Bank Clubcard Credit Card for Purchases. You'll collect one point for every £4 spent in Tesco (£4 minimum spend) and one point for every £8 spent elsewhere (minimum £8 spend).
Cashback credit cards
With a cashback credit card you get a percentage of what you spend back in the form of cashback.
The Asda Cashback Plus Credit Card can nab you 2% cashback on all your spending at Asda including petrol and George.com. What's more, you'll earn 1% cashback on all other purchases and 10% cashback on selected Asda Money insurance products. If you incur a spot of debt over the festive season, you've got 15 months of interest-free balance transfers too. This one is better for you if you're planning on doing a lot of shopping at Asda as the card has a £3 monthly fee.
If you want to forego the fee, the Asda Cashback Credit Card. It gives you a lower 1% on Asda shopping and 0.5% everywhere else, but you can still get that 10% on Asda insurance products.
Cashback credit cards tend to be reserved for those with good credit ratings, but if yours doesn't hit the mark you could try the aqua Reward Credit Card, which allows you to earn 0.5% on all purchases with no annual fee. However, you'll want to make sure you can repay what you spend each month as the representative APR is 34.9%.
Reward credit cards
Reward credit cards allow you to boost or build up points as you spend which convert into all manner of treats.
If you collect Clubcard points, your best bet is to go with the Tesco Bank Premium Credit Card which gives you one point for every £1 spent (£1 minimum) in Tesco and one point for every £4 spent (£4 minimum) outside Tesco in each transaction.
For all of the other cards you'll get one point for evert £4 spent (£4 minimum) in Tesco and one point for every £8 spent (£8 minimum) outside Tesco in each transaction.
For those that collect Nectar points, Sainsbury's Bank offers two Nectar points for every £1 spent in stores and fuel or one Nectar point for every £5 spent elsewhere on all of its cards including the Sainsbury's Bank Purchase Credit Card.
Those that would prefer to build up Avios for flights and holidays can use the British Airways American Express Credit Card to collect one Avios for virtually every £1 spent. At the moment you can get 5,000 bonus Avios when you spend £1,000 within the first three months. The representative APR is 22.9%.
Alternatively you could go for the British Airways American Express Premium Plus Credit Card. You'll earn 25,000 bonus Avios when spending £3,000 within the first three months and 1.5 Avios for virtually every £1 spent. The representative APR is 22.9% but watch out for the mammoth £195 annual fee.
With the Lloyds Bank Avios Rewards Amex/Mastercard you can earn 1.25 Avios for evey £1 spent on the Amex card and 1.25 Avious for every £5 spent on the Mastercard. You can also earn earn double Avios for the first six months of account opening using the Amex card (capped at £2,500 a month), and 1.25 Avios for every £5 balance transferred from a single provider. APR is 23.7%.
If you collect Virgin's Flying Club Miles the Virgin Atlantic White Credit Card can boost your balance. It also comes with two cards on the same account. With the American Express card you earn one Flying Club Mile for every £1 spent, while you get one Flying Club Mile for every £2 spent on the Visa card. At the moment you can get 3,000 bonus miles with your first card purchase within 90 days of opening the account. The representative APR is 17.9%.
Or you could upgrade to the Virgin Atlantic Black Credit Card which gives you two Flying Club miles for every £1 spent with your Amex credit card and one Flying Club mile for every £1 spent on your Visa credit card. Even better, you can bag a whopping 18,500 bonus miles if you make your first card purchase within 90 days of opening the account. The representative APR is a higher 22.9% and there's a £140 annual fee.
Play your cards right
Watch out for reward and cashback cards that don't come with a 0% purchase period. With these cards you should aim to pay back your bill in full each month to avoid interest eating into your cashback or rewards.
With cards that do come with a 0% introductory period make sure you have a plan on how to repay what you spend before the interest kicks in.