Pick A Better Credit Card!

Discounts off train travel, supermarket shopping, petrol and more are all up for grabs for those that pick the right card.

If you're a keen credit card user, always pay off your balance in full, and consider yourself pretty canny you'll probably fall into one of two camps. You have a 0% card for new purchases, or a cashback credit card.

0% Credit Cards for New Purchases

Use this type of card and you'll benefit from not paying any interest on purchases made for up to 10 months (simply ensure you make the minimum payment each month and pay off the balance when the 0% period is up). Stash the cash spent into a savings account you'll make a bit of interest on it over the year, too.

Just make sure you get a new card before the 0% period runs out.

Cashback Credit cards

Cashback cards mean you earn a percentage back of what you spend as cash. But whichever method you choose, you'll be gaining a little for your spending that you wouldn't be getting from using a debit card!

Sounds straightforward, right? But like anything, times change. The card you took out a year ago may not be the best one to go for now, especially if your spending pattern has altered.

So here are a few card user examples and the best cards for them:

Examples

Sam lives in London; she's 26, a seasoned traveller and regularly travels up to Liverpool by train at the weekend to visit her family.

If Sam is looking for a 0% card, the Marks & Spencer (M&S) Money credit card is offering 0% for ten months, with the added bonus that all spending will earn M&S reward points. And the Halifax One and Bank of Scotland MasterCard each offer 0% for nine months.

Alternatively, the Virgin Credit Card may not give the most generous 0% period for new purchases (just 6 months) but card holders get 10% off any Virgin Advance fare on Virgin Trains.

James is 30, and about to get married. He and his fiancée have dozens of bills to pay, from hall hire to honeymoon and they're hoping to cannily do so with their credit card.

The American Express Platinum card could be a good option for James. Offering 5% cashback for the first three months (up to £4k spend) he could potentially make £200 of his wedding expenses back in cashback straight away, plus continue to earn cashback throughout the year (0.5% on spending up to £3,500; 1% up to £10k and 1.5% for spending over this sum).

However, as American Express is not as widely accepted as Visa or MasterCard, you may prefer an alternative cashback card. These include the Bank of Ireland Moneyback MasterCard and Smile Classic Visa, which each offer 0.5% cashback (up to £15k per year). So unfortunately, they're not as competitive as the Amex card for big spenders.

Mark is 35, and is married with two kids. Mark is a salesman and drives extensively around the country. Mark's wife Jane works part-time and they do the majority of their shopping, online.

In addition to the cards mentioned, (and bearing in mind how much he spends on fuel) Mark could consider the Abbey Credit card. Although its 0% period for new purchases is rather mean (just 3 months), it offers 3% cashback on spending at supermarkets and petrol stations (up to £12.50 cashback per month for the first 6 months).

Alternatively, the Egg Card offers 2% cashback on all fuel purchases at Shell stations until 31 March, many other cashback deals and 0% for new purchases until April 2010. What's more, this card also offers an internet shopping guarantee and free Purchase in Transit protection (which covers items costing £25 - £1k for up to 30 days from loss/accidental damage).

Of course, cashback cards are pretty straightforward; pay off the balance in full each month (ideally by direct debit) and you get to keep the cashback earned (with no interest to pay). Just bear in mind a few caveats if you're considering a 0% credit card for new purchases (see 0% Purchase Rules, above).

Finally, whichever type of card you choose, check out your credit report first to make sure there aren't any errors which could lead to your application being turned down.

0% Purchases Rules

 Making minimum payments on time is critical with a 0% card for new purchases. Seasoned players set theirs up to be paid automatically by direct debit!

 Make sure you have the cash to pay off your balance when the 0% period is up. Set up a dedicated savings account and be meticulous about transferring every sum spent on the card to that account!

 Note when your 0% period expires! Pay the balance off in good time; the very nervous could even arrange to convert their penultimate minimum payment to a full payment.

Compare cashback credit cards  and 0% on purchase credit cards now!