When I'm at parties and people discover I'm a ‘Money Saving Expert', the ones who don't yawn and walk away almost invariably ask me, "What's the best credit card?" This always stumps me, as there's no right answer.
The aim of this article is to ask a few questions to help you decide what type of credit card is right for you. After that you'll be linked through to a full article on how to choose and use that specific type of card.
 One card doesn't fit all Which card is right for me? Other ways to benefit from plasticIf you're debt-free Protection Related Articles/Discussion |
 The best card depends on how you use it. |
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There is no one size fits all credit card. If you try and do that, the card companies will love you forever, as you'll put serious cash in their pockets.
Lenders utilise the fact that people use one card for many purposes to manipulate us. For example; use a card where their special offer is to ‘shift debt to us' and then spend on it, and you'll end up paying an unexpected fortune due to clever techniques like ‘payment allocation'.
Precision Plastic
To properly play your plastic you need to use a range of cards as bespoke precision tools. Using the right tool for the right job will tear down your credit card costs. For those who are worried about ‘over-complication', don't be - each technique allows you to choose between methods designed for the financially active and those who prefer an easy life.
And if you're worried your wallet'll be stuffed with more cards than Paul Daniel's sleeves, again don't be, often just two or three cards will do the trick.
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The following is my specially designed series of questions, which will take you through to the right article for you. However it assumes you are eligible for new credit.
If you're usually turned down for new credit card applications, there are a number of important steps. The first thing to do is check there are no errors on your credit reference files. Full details of this are in the Your Credit Rating article.
Yet, even if there are no errors, don't give up – there's still another way to cut the cost. I have a special technique called ‘The Credit Card Shuffle', which in some cases can cut the interest in half without any new cards. And if you're really having debt problems have a read of my article Where To Start With Problem Debts? A Step-by-step Solution. This includes a checklist to help you decide what to do next.
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The questions above will take you through to the right plastic. However the boon of credit cards doesn't stop there. It's possible to use cards to make profit and to play with them to get added advantages. For those who want to step it up a level, read on.…
Are you debt-free? Take revenge and make free cash
Substantial cash is available from this, but it should only ever be used by those with a good credit history, no debts, who aren't planning to borrow and prepared to make a little effort. Article: REVENGE: Make Free Cash From Credit Cards.
If you do need to borrow to spend, then use the Best Credit Card For Spending On. If you already have debts on a store card, then you can simply move them somewhere cheaper using the best Balance Transfer Card them.
Yet there are a couple of reasons to have a store card, again providing you never, ever, ever use them for borrowing on. Ooops nearly forgot, I don't know if I've mentioned it before, but if not let me just re-iterate to make it plain, never, ever, ever, ever borrow on a store card.
- Membership benefits. Many store cards have special store card holder evenings and offers, a bit like a membership club. And there's nothing wrong with keeping a store card just for this.
- Initial discount offers. Most store cards offer a bribe for signing up – such as 10% off the first time you spend on it. Hold off joining until you're ready to buy something RRR-EALLY expensive. Or to be even more cunning, ask friends & family if they want anything too (make them give you the cash), then get the discount but pay off the balance in full so there's no interest charged. And if you bought your friends stuff, they can always sign up, get a discount, and return the favour.
- A back door trick. The final good use for store cards is if you're locked out of the house late at night….
Yet do remember never, ever, ever borrow on a store card.
The right credit card is the cheapest way to spend abroad
Yet most card providers snaffle the benefits by ‘loading' exchange rates and adding up to 3%. Plus take cash from an overseas hole in the wall and there are withdrawal fees e.g. Capital One charges 2.5% or £2.50, whichever is higher.
However there are some credit cards that specialise in overseas use, grab one of these, just for tripping abroad and you can cut your holiday spending cost by 6%, for full details read the Best Card For Overseas Spending.
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Credit cards are in many ways superior to their debit card equivalents when it comes to their protective powers. This manifests in a number of different ways:
- Legal Rights. If you buy something that costs more than £100 and less than £30,000, and partially or fully pay for it on a credit card, you gain a valuable legal protection known as ‘section 75'. This means the credit card company is equally liable with the retailer if you have a problem with your statutory consumer rights.
In other words if you buy something and the company goes bust, or it isn't fit for purpose (article: Consumer Rights)then you can go straight to the credit card provider. This is especially powerful if you're buying overseas, or from a foreign website, as it's much easier to track down and contact a credit card company than a shop overseas. It's important to note, this protection only applies to credit and not debit cards. - Payment protection. Some cards choose to offer an additional ‘purchase protection'. This reimburses you if the goods are lost, stolen or accidentally damaged. For example, it covers £50 to £15,000 worth for the first 90 days. If you're buying something expensive, it's well worth using this.
- Travel Accident Insurance. Many cards also have free travel accident insurance with £50,000 to £250,000 worth of cover for accidents on planes and hire cars booked with them. It's important to note this isn't the same as travel insurance; it's a massively more limited cover. Some platinum and gold cards do include full travel insurance, but ensure you pay for the entire holiday, including the deposit, with the card to qualify.
- ID Fraud protection. One or two credit cards have started offering ID Fraud protection as part of their benefits. This means you'll get access to their help lines if you have a problem. As you don't need to use the card to be protected, and the help applies even if the ID fraud doesn't impact the card, it's worth having. Article: ID Fraud Protection article.
- Internet Spending Protection. The Cahoot credit card has a special scheme to help protect those spending on the web. The Cahoot webcard generates a new number for every transaction, making it very difficult for you to be defrauded. For those who regularly spend on the net, it's worth adding it to your credit card arsenal. Article: Cahoot Webcard.
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