Four Cracking Credit Cards For 2009

Looking for a first-class credit card to help get your finances in order? Here are my top four credit cards for the new year.

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I don't know about you, but I find that when it comes to selecting a credit card, there are just too many to choose from and it all gets rather confusing. And being quite possibly the worst decision maker in the world, I can quite understand why it can be hard to figure out which credit card is right for you.

Of course, different credit cards have different strengths, which means your decision should always be based on how you personally want to use your credit card. So, keeping this in mind, I've hunted out the best credit card in four different circumstances.

Best balance transfer credit card

Balance transfer credit cards are a great way of giving yourself some breathing space while you sort out your finances. And if you're in debt, I believe nothing beats the Virgin Money Credit Card.

Offering an interest-free period on balance transfers for a whopping 16 months, this card gives you plenty of time to start tackling your debts head on, without worrying about the interest.

But what I really like about the Virgin Money card is that it also includes `money transfers' in its 0% deal. Unlike most 0% credit cards, which only allow you to transfer debt from other credit cards, the Virgin Money card allows you to transfer cash into your bank account. So this means you can shift your overdraft and personal loan debts on to the card and you won't have to pay interest on them for the 16 month period! And if you don't pay any interest, you can pay off your debt much quicker.

The card also offers 0% on new purchases for six months. After these six months are up, the card is subject to a dirty trick called negative payment hierarchy - so I wouldn't recommend you use this card to make any new purchases unless you intend to clear your balance within six months, instead of 16 months.

On the downside, you should be aware that the Virgin Money Credit Card is part of the MBNA group. This means that if you already have a card issued by MBNA, you may not be accepted for the Virgin Money card. Plus, the card charges a fee of 2.98% of your balance when you transfer - although this is actually slightly lower than the typical 3% fee most lenders charge.

After the 16 months is up, the interest rate on the card reverts to a typical APR of 16.6%. So if you haven't cleared your debt by then, you will need to switch to another 0% balance transfer credit card to avoid a hefty interest bill.

Best feature:

 0% p.a. for 16 months on balance transfers (including cash transfers)

Beware:

 2.98% transfer fee

 Negative payment hierarchy after first six months

 After 16 months, the rate reverts to a typical APR of 16.6% - so time to switch.

Best new purchases credit card

If you don't have a balance to transfer, but simply want to make some interest-free purchases on your new card, I think the Barclaycard's Platinum Credit Card is a great option. This credit card offers interest-free spending for an impressive 10 months .

Best features:

 0% p.a for 10 months on purchases

 6.5% p.a. on balance transfers until paid in full

Beware:

 2% balance transfer fee

 After 10 months, the purchases rate reverts to a typical APR of 16.9%

Best new transfer and purchases credit card

If you are looking for the best single credit card for combining balance transfers and new spending, then the Halifax All In One Mastercard is perfect. This credit card offers a generous nine month interest-free period on both balance transfers and new spending. Even better, you won't have to worry about negative payment hierarchy.

Best features:

 0% p.a. for 9 months on balance transfers (made within first 90 days)

 0% p.a. for 9 months on purchases

 No need to worry about negative payment hierarchy

Beware:

 3% transfer fee

 After 9 months, the rate reverts to a typical APR of 15.9% - so time to switch.

Best cashback credit card

Alternatively, if you want to earn a little extra cash as you spend, you could consider a cashback credit card.

Knocking the socks of the competition is the American Express Platinum Cashback Credit Card which pays a fabulous 5% cashback for the first three months (up to £4,000), and up to 1.5% thereafter. So if you spent a monthly amount of £1,000 for the first three months, you'd get £150 in cashback. Better than nothing, right?

It is worth noting though that cashback credit cards are better suited to those of you who pay off your bill in full each month. That's because cashback cards typically charge a high yearly interest rate --  Amex charges a massive 18.9% APR. So if you allow a balance to build up on your card, the interest paid will far outweigh any cashback accrued.

Similarly, American Express isn't accepted everywhere - so you may want to carry another credit card, just in case.

Best features:

 5% cashback on purchases for 3 months

 Up to 1.5% thereafter

Beware:

 Typical 18.9% APR

 Not accepted everywhere.

So there you have it, some top credit cards to meet a range of needs. Here's hoping one will fit the bill for you!

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