Top ten credit cards for Christmas

Robert Powell looks at the ten best credit cards for the festive season...

So the trucks are going on tour. Yes, Coca-Cola’s Christmas advert is now so popular, the company is sending out the red trucks to greet the adoring fans nationwide. Presumably they will be accompanied by an ensemble of employees constantly whispering ‘holidays are coming’ to any person that happens to pass by.

But in all seriousness, for many the arrival of that Coca-Cola ad heralds the start of Christmas. And by that logic, the festive season began on 12 November this year. How depressing.

Yet when it comes to footing the festive bill, it’s never too early to start planning.

Spending

Interest-free credit cards can be a good way to spread out the cost of Christmas, but only if you are positive that you can pay off your balance. More credit is certainly not the way to plug a festive funding gap if you think you’ll struggle to shift the January hangover. Yes, we all want to have a jolly Christmas, but plunging into debt in order to foot the bill is not a price worth paying.

It’s also worth noting that you’ll need to get your credit card application in soon for spending this year. After all, there are now fewer than 35 shopping days left!

So, public service announcement over, here are the top credit cards offering 0% on all new purchases:

As you can see, Halifax, Tesco and M&S come in top for the longest 0% spending periods. All three accounts offer a huge 15 months interest free. The Halifax All in One card also offers a full 15 months at 0% on balance transfers, though you will have to pay a 3% fee.

Barclaycard is hot on the tails of Tesco and M&S with a 14-month 0% spending card, followed by 13-month deals from Virgin and Creation, although to get hold of the Creation card you’ll need to be over 25.

Best of both worlds

The 0% spending table above also includes some of the best all-round cards that are currently floating about. Barclaycard leads the way in this category, boasting an account with 14 months free of interest on both purchases and balance transfers.

Virgin and Halifax come in second with their 13-month all-round offerings.

However, if you are planning on making a balance transfer, ensure you check who issues your card. Most suppliers will not allow you to transfer debt between their own cards, even if they are branded differently. So if you already have a stack of debt on a Barclaycard, you won’t be able to shift it over to another Barclaycard. Similarly, as MBNA and Virgin Money cards are both issued by the Bank of America, you will not be able to transfer debt between these accounts.

You should also watch out for sneaky order of payment traps if you are intending on using both the spending and balance transfer functions of your card. Head over to Credit cards that bend the rules for more.

Cashback cards

If you’re positive that you can pay off your credit card bill in full every month, then opting for a cashback card will allow you to earn money back from your Christmas spend.

Here are four of the best cashback cards around at the moment:

Capital One leads the way, offering a massive 5% cashback on your first £2,000 of purchases for a full three months. That’s a possible £100 up for grabs. From here the cashback levels are staggered. If you have an annual spend on the card of under £6,000 you’ll earn 0.5%, 1% is paid if you shell out over £6,000 per year but less than £10,000. And you’ll get 1.25% if your yearly bill is in excess of £10,000. So as you can see, you’ll need to be using the plastic a lot to reap the biggest benefits.

American Express also offers a promotional three-month cashback rate, however this is set at just 2.5% with a £100 limit. This means you’ll need to shell out £4,000 in the first three months to cash in on the full £100. Following this you’ll earn 1.25% on all spending, though in this rate will double to 2.5% each year in the month in which you took out the card initially (so if you get the card in March, each March your cashback rate will double). The card also comes with a £25 annual fee.

Santander’s 123 card has three tiers of cashback levels. You’ll receive 1% back on all supermarket shopping, 2% on department store spending and 3% on fuel purchases. This card also comes with a fee: £24 each year.

AA’s offering is more a rewards card than a cashback card, as you’ll earn points back on your purchases that can then be spent on motoring products and services. However on the plus side, this deal does offer 10 months at 0% on purchases, and 12 months interest-free on balance transfers.

But remember, if you do plump for the cashback option, make sure you clear the whole bill every month or the interest charges will outweigh the cashback payments.

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