Ed Bowsher takes a look at four cracking credit cards that could help you get your finances in ship-shape for the summer.
This article was first sent to Fools as part of our 'Summer Lolly' email series.
Last week I wrote about `My Favourite Credit Card.' As a follow-up I thought I'd look at four more top cards that could help you get your finances in ship-shape for the summer.
Of course, everyone's finances are different, but hopefully at least one of these cards will be right for you and your circumstances.
Balance Transfers
Most credit cards charge very high interest rates on debt -- 15% or more. So if you have debt on your credit card, it makes sense to transfer your debt to a 0% Balance Transfer Credit Card if you possibly can.
If your debt is chunky and you think it will take longer than six months to pay it off, then my pick is the Virgin Money Credit Card Mastercard. If you transfer your debt to this card, you won't have to pay any interest for 15 months (subject to a 3% fee.)
Be careful though. Don't use your Virgin card for any spending until you have completely paid off your balance transfer debt. Otherwise you'll get clobbered by negative payment hierarchy.
This means your monthly payments will go towards paying off your balance transfer and not your purchases. Your balance transfer debt is interest-free but your purchases are not. So you will pay off your most expensive debt last.
An all-rounder
If you think you could pay off your credit card debt within six months, take a look at the Abbey Zero card.
True, its 0% balance transfer period is only six months, but, unlike Virgin, it charges no fee. What's more, you won't get hit by negative payment hierarchy either because there's a six month 0% period for purchases too.
On top of all that, Abbey's card doesn't charge for cash withdrawals at most `holes in the wall' and also doesn't charge a foreign exchange fee either.
Cashback
Some of us, however, don't have any credit card debt. If you're in that position, there's a case for saying that you don't need a credit card at all. Just use a debit card instead.
Then again, some of the cashback deals currently on offer might tempt you. I particularly like the Capital One Platinum Cashback Mastercard. If you sign up now, you could earn 4% cashback on purchases until August 1, 2008, and 1% after that. (You'll only earn cashback on spending up to £1500 during each monthly `statement period'.)
So if you spent £1500 each month until August 1st you could get £180 in cashback. Sounds good!
Rewards
Another approach is to sign up for a rewards credit card. Instead of cash, you get points for a rewards scheme such as Air Miles or Nectar points.
Trouble is, a lot of these cards don't offer that many points. So, more often than not, you're probably better off going for cashback cards.
That said, you might like the Shell Mastercard if you drive a lot. This card gives you a 3% rebate on any Shell petrol purchase in the UK. The rebate must be used against further Shell petrol purchases. You'll also get a 1% rebate if you use your card anywhere else. Sounds good....
Whatever your financial goals this summer, if you're thinking about taking out a credit card, hopefully one of these will fit the bill for you.
More: Stretch Your Credit Card Benefits! | The Best Credit Cards to Use Abroad | How To Build An Excellent Credit History
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