Switch to the best credit card deal

If your wallet is packed full of the same plastic that’s been there for years, you’re almost certainly chucking money down the drain. That’s true whether you use your credit card for borrowing, or just for spending that is paid back each month. Switching to one of the best deals can help save those who are in the red thousands of pounds in interest charges, while new cashback deals will give others hundreds of pounds of “free money.”

Here’s the lowdown: anyone needing to borrow to spend on major purchases should consider a card that demands no interest paid on new purchases. Don’t succumb to one of the deals offered at the tills by retailers, they’re rarely the best available offer.

Instead, check out Halifax’s All in One card, M&S Money’s credit card or Tesco Bank Club card: all offer 0% interest for 15 months. Users should set aside cash to help them repay the balance before the end of the term to avoid a high interest bill after the deal ends.

Those with an existing card debt should look at switching to cut their interest bill. Banks are offering a massive 22 months’ worth of interest-free balance transfer deals on cards including Barclaycard’s Platinum and Halifax’s “22 month balance transfer card” (not an imaginative name, but still). The former has a one-off transfer fee of 2.9 per cent whilst Halifax charges 3.5 per cent. NatWest offers an interest-free card for 20 months with a 2.9 per cent transfer fee.

But spenders who repay their balance each month should apply for a cashback deal. Top of the league tables includes two paid-for accounts, from Santander and American Express, and a free deal from Capital. Santader’s 123 card pays out three per cent on petrol spend, two per cent on shopping in department stores and one per cent on purchases in supermarkets, but has £24 annual fee.

Amex’s platinum cashback card gives out five per cent cashback on the first three months of spending, then 1.25 per cent after that, for a £25 yearly fee. Or Capital One’s Aspire World card pays out the same five per cent cashback for the first three months, then between 0.5 per cent and 1.25 per cent depending on annual spend, and is free of charge.

“It’s unusual to find one card that’s good for everything, so it makes perfect sense to have three or four different cards in your wallet and use each for its best feature, such as one that offers 0% on purchases, another offering that on balance transfers, one that’s cheap to use abroad, and one for cashback,” says Andrew Hagger, of comparison site Moneynet.co.uk.

“If you’re using a card to earn rewards or cashback, make sure you repay the balance in full every month otherwise the interest charges can wipe out the value of rewards earned.”