13:16 11 December 2012
If one of your New Year's resolutions is to take control of your finances, now is the time to get started. With little more than four weeks until January 1, 2013, you'll need to start shopping around for the right credit card now - whether you're looking to transfer a balance, pay off other debt or start reaping rewards for your spending.
So let's take a look at 2013's top five credit cards in each camp.
1. Cards that offer 0% on purchases
As the number of shopping days until Christmas dwindles, so the hunt for this year's must-have items intensifies. But before you embark on that seasonal spending spree, it may be worth considering a credit card that offers 0% on purchases.
The Tesco Clubcard credit card currently has the longest 0% period on purchases, offering 16 months of interest-free spending, which should give you plenty of time to pay for those presents.
However, it's important that you pay off the balance in full by the end of the introductory period as the representative APR jumps to 16.9% (variable) once the time months is up. The card also offers 0% on balance transfers for nine months, subject to a 2.9% balance transfer fee.
Frequent Tesco shoppers can also benefit from the fact the also doubles up as a Clubcard that earns you points every time you spend; one point for every £1 spent in Tesco stores, at Tesco Online or at Tesco petrol forecourts (with an extra point for every £4 spent on fuel), and one point for every £4 spent elsewhere.
Another card that offers rewards on shopping is the M&S Credit Card which will earn you one point for every £1 spent in M&S and one point for every £2 spent elsewhere.
The card is also a good option for anyone planning a festive spending spree as it offers 0% interest on purchases for 15 months. Again, though, it's important that you pay off the balance before the introductory period ends as the representative APR then jumps to 15.9% (variable).
The Halifax Online All In One credit card also offers 0% on purchases for 15 months - and on balance transfers, which are subject to a 3% fee. The representative APR then rises to 17.9% (variable).
2. Cards for 0% balance transfers
It could be the case that you already have existing credit card debt and you're looking towards the New Year as a chance to take control of your finances and pay down that debt. If so, then a balance transfer credit card should be your first port of call.
Barclaycard is currently offering the longest balance transfer period on the market; its Platinum Credit Card with Extended Balance Transfer offers 24 months (yes, that's two years!) to pay off the balance before it starts charging interest.
If you've not paid off the balance within the 24 months though, you'll be hit with a representative APR of 17.9% (variable). You will also have to factor in the 2.8% balance transfer fee. However, if you are transferring more than £2,000 you can currently receive a £30 discount off this fee.
If you have a relatively large balance to transfer then you might be better off opting for a card with a low balance transfer fee, such as the Barlcaycard Platinum Lowest Balance Transfer Fee Card.
When you shift your balance on to this card you'll pay a fee of just 0.9%. The downside though, is that the 0% interest period is just 12 months after which time it will jump to a representative APR of 19.9% (variable).
Other cards that offer a good rate on balance transfer fees are the NatWest Platinum Low Balance Transfer Fee credit card and the Royal Bank of Scotland Platinum Low Balance Transfer Fee credit card.
The transfer fee on these cards is 1% and both come with an interest-free period of 13 months, after which time the representative APR is 17.9% (variable).
3. Cards that allow money transfers
If you've cleared your credit card debt but you're paying an eye-watering rate on a store card, overdraft or even a personal loan, then it could be worth considering a card that offers money transfers. This is when borrowing from the card provider is paid straight into your bank account, allowing you to use it to pay down other debts.
The MBNA Platinum credit card offers 0% interest for 22 months on both money transfers and balance transfers so it could be used to help pay down existing debts on credit cards or other lines of credit.
And because money transfers are paid into your account for you to use as you see fit, the cash can also be used for any new purchases which you can fund over 22 months without incurring interest.
However, before you jump right in you'll need to factor in the fees of 2.85%on balance transfers and the whopping 4% that you'll have to pay on any money transfers. Furthermore, at the end of the 22 month period the representative APR rockets to 18.9% (variable) on balance transfers and (brace yourself) 20.9% (variable) on money transfers.
The card also offers 0% on card purchases for three months and has a representative APR of 16.9% (variable) thereafter.
Alternatively, the MBNA Everyday credit card offers 17 months at 0% on balance transfers (subject to a 2% transfer fee) and money transfers (with a 4% handling fee) as well as seven months at 0% on purchases.
This card also comes with a low standard APR of 11.9% (variable) on purchases but the APR on balance transfers and money transfers is, again, much higher, coming in at 18.9% (variable) and 20.9% (variable) respectively.
Another option is the AA Transfer Plus Credit Card which, instead of coming with an interest-free period, offers a standard low rate of just 6.9% on balance transfers and money transfers, both of which are subject to a relatively low transfer fee of 2%.
However, it's worth noting the representative APR on purchases is 16.9% (variable) and so if you do use it to buy any goods you should make sure that you pay off the full balance at the end of each month so you don't incur these higher interest fees.
4. Cards that offer one low rate
Balance transfer cards are great provided that you can pay the debt off in full before the high interest rate kicks in at the end of the introductory period. If you don't think that you'll be able to do so then you may be better off taking out a credit card that offers a low rate for the life of the balance.
The Sainsbury's Low Rate Credit Card is one of the best around, offering a market-leading standard low rate of just 6.9% (variable) and no balance transfer fee.
The Barclaycard Platinum Simplicity Credit Card also comes with a standard low rate of just 7.9% (variable) again with no balance transfer fee. (However, you cannot transfer the balance from another Barclaycard.)
Although the standard rate is low on these cards, it's always recommended that you pay off the balance in full at the end of each month to avoid incurring any interest charges at all.
5. Cards that offer rewards or cashback
If you're in the habit of clearing your credit card balance at the end of each month, then you'll not benefit from 0% interest offers or standard low rates and so you should look instead towards cards that offer rewards or cashback.
TOP CARD FOR REWARDS!
The Barclaycard Freedom Rewards card gives you one point for every £1 spent on the card anywhere in the UK or abroad; two points for every £1 spent at any UK supermarket or petrol station, and three points for every £1 spent at selected retailers.
It also comes with £30 worth of high street vouchers (equal to 10,500 points) if you spend £500 on the card within the first three months.
The card has a standard APR of 18.9% (variable) and comes with nine months' interest-free on balance transfers, subject to a transfer fee of 2.9%.
If you want a more versatile card then NatWest's YourPoints World Mastercard not only offers rewards but also comes with 0% on purchases and balance transfers (subject to a 2.9% fee) for 13 months. Once this period is up then the interest rate rises to a representative APR of 17.9% (variable).
As far as rewards go, you can earn one point for every £1 spent and these can be redeemed against flights, holidays and goods or services bought at selected high street and online retail outlets.
TOP CARD FOR CASHBACK!
If it's cold, hard cashback that you're after Barclaycard has a deal - the unsurprisingly named Barclaycard Cashback Card - which comes with a 6%three-month bonus that offers up to £120 cashback on your top five purchases.
The long term cashback rate is 2% and the interest rate on purchases is19.9%, rising to a toe-curling representative APR of 24.6% when the £24 annual fee is factored in.
Look also at the Santander 123 credit card which offers up to 3% cashback when you use it at major petrol stations and on National Rail and Transport for London travel.
You can also earn 1% on any supermarket spending and 2% on department store purchases, but if you don't clear your balance in full at the end of each month this will be outweighed by an interest rate of 18.9% (variable) - when you factor in the £24 annual fee, this rises to 22.8% (variable) representative.
The American Express Platinum Cashback offers another option if you are looking for something back, giving up to 2.5% cashback with a three-month bonus period in which you can earn up to 5% on up to £2,500. The APR on this card is lower than Santander's offering, coming in at 14% variable, jumping to a representative APR of 18.5%variable when the £25 annual fee is taken into account.
So, as is the case with any credit card, it's imperative that you pay off the full balance at the end of each month to avoid having to pay interest on your borrowing.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct. We're free, independent and compare all UK credit cards, as well as offering exclusive deals you can't get anywhere else.
Contact: MoneySupermarket.com at Moneysupermarket House, St David's Park, Ewloe, Flintshire, CH5 3UZ. © Moneysupermarket.com Ltd 2012.
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