The best credit cards for Xmas

With just two months to go until Christmas, now's the time to work out how to pay for this year's festivities.

Ideally we’d all have saved up during the year to pay for Christmas, but if you haven’t and plan to fund the festivities on credit, you need to apply for a new credit card now to be sure of receiving it in time to use for your Christmas shopping. But which credit card is best?

Zero-interest purchase cards

If you are looking to spread the cost of Christmas because you can't afford to pay for everything upfront, it's a smart move to go for a cardthat offers an interest-free period on purchases. 

Both Marks & Spencer Money and Tesco Bank offer 15-month interest-free deals. The M&S Money MasterCard has the added benefit as doubling up as a reward card with cardholders earning one point for every £1 spent at M&S, while Tesco offers Clubcard points when you spend on the Clubcard MasterCard with additional points when you shop at Tesco.

Other zero-interest purchase deals include Barclaycard’s Platinum card at 14 months and Halifax’s All-In-One MasterCard at 13 months.

However, unless you plan to be paying for Christmas 2011 way into not just 2012, but 2013 as well, then you might be happy with a card with 0% interest on purchases for a shorter term. Sainsbury’s Finance and the Bank of Scotland both offer 12-month zero interest cards while the AA Visa card charges no interest on purchases for 10 months.

Low rate credit cards

One problem with 0% credit cards is that you need a pretty decent credit rating to get one and also once the interest-free period is up you’ll be charged a hefty APR, normally between 16 and 19%. This might prompt you to switch cards again when the 0% period is over.

For people not keen on frequent switching or likely to forget to do so, a card with a flat low rate might be better for you.

Sainsbury’s Finance offers a low rate credit card at 6.9% while Barclaycard’s Platinum Simplicity Visa card has a rate of 7.9%. Capital One’s Click MasterCard has a rate of 9.9% and has the added benefit of offering exclusive discounts at selected online retailers.

Cashback cards

If you are confident that you’ll be able to pay the bill in full each month, even at Christmas, then a cashback card could be a good option.

For example, Capital One’s World MasterCard offers 5% cashback for three months (capped at £100) and then tiered cashback from 0.5% to 1.25% on further spending throughout the year.

Meanwhile the Amex Platinum Cashback credit card offers up to 2.5% cashback for the first three month up to a maximum of £100 followed by an ongoing cashback rate of 1.25%. However the card comes with an annual fee of £25 so you need to be sure you’ll recoup this in cashback for it to be worthwhile.

Reward cards

Reward cards are another good option if you can repay the bill in full each month. They work a bit like cashback cards in that you’re rewarded for spending on the card but the “rewards” you get tend to be specific to certain stores or brands.

Amazon fans might benefit from MBNA’s Amazon.co.uk credit card. As well as offering zero interest on purchases for nine months, cardholders earn one point for every £1 spent on Amazon and £2 spent elsewhere. You’d have to spend a fair bit on the card to make the rewards worthwhile though; 1,000 loyalty points (£1,000 spend on Amazon or £2,000 elsewhere) will mean you receive a £10 gift certificate for use on Amazon.co.uk.

Other decent reward cards include Amex’s British Airways card and Santander’s Debenham’s Mastercard.

The golden rule with both cashback and reward cards is to only use them if you always pay the bill in full each month. Otherwise any rewards you receive are likely to be dwarfed by the interest you’ll pay.

Extra protection

As well as being a good way to spread the cost of Christmas, buying presents on your credit card can also give you some extra protection if things go wrong.

Goods costing between £100 and £30,000 are guaranteed by the credit card company under Section 75 of the Consumer Credit Act 1974.

You can use this act to get your money back if goods you’ve ordered don’t turn up, the seller breaches its contract or the retailer goes bust.

More: Five reasons a balance transfer card isn’t good for you | Four things you need to know about shopping online