The Best Credit Cards To Shop With
When you're flashing your plastic in town, be sure to carry the right credit card. If you do, you can enjoy up to ten months' interest-free credit, or even money back!
When retailers want to drum up more business, they often resort to the tried and tested technique of offering interest-free credit on purchases of, say, £500 or more.Indeed, when I moved into my first house in early 1993, I funded every major purchase with interest-free credit, sometimes lasting up to two years. The reason is that, at that time, the housing market was in the doldrums, so department stores were desperate to attract shoppers, hence their generosity with 0% finance.These days, I prefer to pay cash for major purchases, in order to negotiate a decent discount off the ticket price, as I explained in The Best Ways To Pay Less. On the other hand, other purchases worth, say, £3 or more go on my Best Buy cashback credit card. Hence, by spending on plastic, I actually earn money -- almost £80 in eight months, in fact!Then again, there is one way that you can get extended 0% finance on all of your spending, simply by paying for goods and services using a "0% on purchases" credit card. Ordinary credit cards only provide you with an interest-free period (of between 45 and 59 days) if you pay off your bill in full each month. So, buy something just after your latest statement is produced and you have up to two months before payment is due. However, if you're not a "full payer", then you'll be charged interest at annual rates of 15%+. Ouch!However, as I hinted above, smart card players can enjoy much longer interest-free periods, even if they only pay the minimum monthly repayment on their plastic. That's because they've sneakily switched to a credit card which offers a lengthy introductory 0% offer on new purchases. According to independent financial researcher Moneyfacts, these cards are the perfect plastic for shoppers who want to avoid paying interest during 2006:Card Initial 0%offer(months)Typical APR (%)Sainsbury's Bank Visa or Platinum1015.9Nationwide BS Classic or Gold914.9Abbey Shopping M'Card/Visa915.9Intelligent Finance Visa 816.9Co-operative Bank Travel714.9So, apply for, say, the table-topping Sainsbury's Bank Visa card today and, once it arrives, you can enjoy a ten-month break from paying interest, lasting well into 2007. Hurrah!However, let me leave you with one final warning: don't abuse your no-interest breather by overspending on your card. Otherwise, when your interest-free deal runs out, you'll find yourself with a massive bill and nothing to repay it with. Eek!Therefore, be sensible: pay each statement's minimum monthly repayment by Direct Debit, but put aside enough to pay the remainder of each bill into a high-interest savings account. That way, when your initial 0% deal expires, you can withdraw your savings and use them to pay off your debt before the interest clock starts ticking. As an extra bonus, you get to keep the accrued interest earned while your money was resting in your savings account.So, if you don't have a Best Buy cashback or 0% on purchases card, why not? Ditch and switch today!More: The Fool can help you to find better credit cards, mortgages, personal loans and savings accounts!