Three credit cards I like

Donna Werbner tells us about her three favourite flexible friends.

This article has already been emailed to readers as part of the 'Finance in focus' series.

You might think all credit cards are pretty much the same. And if you use your card for scraping your windscreen or breaking into someone's flat, then you're probably right. But if you use your credit card to, well, buy things, then you're mistaken.

Unfortunately, lurking behind that innocent plastic exterior, each card has sneaky catches and negative features. And some are a lot worse than others.

So which one should you get? It all depends on how you want to use it. Here are three very different cards which I like - warts and all.

1. Virgin Money Credit Card Mastercard

The reason I like this card is simple. It offers you 16 months interest-free on balance transfers. That's the longest interest-free period of any 0% balance transfer credit card in the market, so you have the maximum amount of time to clear your debt without paying any interest.

Also, unlike most cards, the Virgin Money Credit Card Mastercard allows you to transfer money into your current account, for a fee of 2.98%. This is useful because it allows you to clear an expensive overdraft, and then pay the money back at 0%. Read this article for more info.

What I don't like 

Sadly, there's also a lot I don't like about this card, so use it carefully and beware the following:

•  If you make purchases on it after the first six months, you'll be caught in a negative payment hierarchy trap. This means you'll end up paying 16.6% interest on your purchases until you pay off all the debt you transferred. So I'd avoid buying anything with this card. Use it simply to get rid of your debt.
•  If you make a single late payment, you are likely to lose your rights to 16 months of interest-free payments. Set up a standing order for the minimum payment to ensure this doesn't catch you out.
•  Despite the Virgin brand, this card is provided by MBNA, which means you can't transfer a balance onto it from any other MBNA card. If this counts you out, your next best option is the HSBC Bank Credit Card Mastercard, which offers 0% for 15 months. 

In summary: This card will suit you if you are paying interest on your credit card debt or an expensive overdraft - but not if you're already an MBNA card customer.

2. American Express Platinum Cash Back Card

This is my favourite credit card, because in the last four months I've earned more than £100 by handing it over to pay for stuff.

Like all cashback credit cards, the American Express Platinum Cash Back Card rewards you for each £1 you spend on it. But unlike with most of its rivals, there's no limit on the amount of cashback you can earn.

If you spend more than £10,000 a year, you earn 1.5%, which is the highest rate of cashback offered by any card on the market. There's also an introductory rate of 5% for the first three months, up to a maximum spend of £2,000.

Also, if something you buy with the card is stolen or damaged within 90 days of purchase, Amex will refund the cost of the item to your account (up to £200). It will also credit you with a refund if a retailer refuses to allow you to return an unused item within 90 days.

What I don't like

If you don't pay off your bill in full every month, you'll end up paying 18.9% annual interest on your debt - and that will far outweigh the 1.5% annual cashback you receive!

There are other problems with this card, too:

•  The rate of cashback you earn is tiered. So if you spend less than £3,500, you earn just 0.5%. The best way around this is to give your partner a supplementary card. That way, you're both spending on the same account. Be careful though: the main card holder is 100% responsible for meeting the debts incurred by the supplementary card holder.
•  Amex isn't accepted everywhere. So it's wise to have an alternative credit card in your wallet as well. I like the Smile Visa cashback card. It only pays 0.5% cashback, but there is no limit on the amount you can earn.

In summary: Go for this card if you're a big spender - but only if you can afford to pay off your balance every month.

3. The M&S Money Mastercard

I like this card because it offers 0% interest on new purchases for 10 months, which is the best deal available for purchases in the market today.

It has another nice feature, too. ?You earn one M&S point for every £1 you spend at Marks & Spencer or every £2 you spend elsewhere. For every 100 M&S points you earn, you'll get £1 to spend at Marks & Spencer.

What I don't like:

•  If you haven't paid off your debt after the 10 months are up, you'll start paying 15.9% interest. So plan to pay off your balance or move it to a 0% balance transfer card at this point.
• You need to be a serious M&S fan to benefit from the reward scheme. Otherwise, I think you're better off with a straightforward cashback card.

In summary: Pick this card if you need to make interest-free purchases for the next 10 months - or if you plan to shop a lot at M&S!  

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