The best credit card deals for holiday purchases and debt clearance

Britain’s accidental move to savers country last year certainly took a toll on its credit card bill.

Those with extra income to spend and nowhere to spend as a result of the lockdown have chosen to pay down their debts and fatten their bank balances, as the nation has traditionally avoided saving.

Britain owed 58.4 billion pounds on credit cards at the end of 2020, according to the Bank of England, down 16.2 percent from the end of 2019, after billions of pounds of balances were paid off last year.

After a new credit card?  We select six of the best available in this regularly updated guide

After a new credit card? We select six of the best available in this regularly updated guide

But while this points to healthier things for a portion of the state’s personal finances, there are still many who need, or simply fancy, new plastic, whether it’s for a major purchase, to settle outstanding debt, or even in preparation for the post-coronavirus phase. . holiday.

Availability of interest-free deals and cards, while low by historical standards, has rebounded in recent months and there are now plenty of decent options, even if they aren’t as generous as they once were.

With that in mind, find our top picks for some of the best credit cards below.

1. Best Debt Clearing Card: MBNA

Interest-free balance transfer deals are among the most popular tips for those looking to reduce the cost of their debt and pay it off before the interest kicks in.

The cards allow holders to transfer debt from an existing card, usually for a fee, to one with no interest for a certain period.

Every year banks tend to make their 0 percent deals more generous in an effort to attract new applicants who want to lower the cost of Christmas spending they may have put on a credit card, and 2021 was no different.

The length of these deals remains low by historical standards, even if they have developed slowly. This is due to the pandemic, and to an ongoing debt crackdown, whereby people simply switch debt from one card to another, paying the minimum possible without liquidating any of their loans.

MBNA offers the best services available today.

It offers 0 percent interest on balance transfers for up to 29 months, with a transfer of 2.69 percent of the balance.

The lack of a fixed minimum fee makes this better for smaller balances. Transfers made after that period will incur 21.9 percent interest, while the card comes with a representative interest rate of 21.9 percent on purchases.

For those who need to make a money transfer directly to their bank account, it also offers 0 percent interest on those for a year, provided it is done within 60 days of card ownership.

Applicants must be 18 or over to qualify for the card, while it requires a minimum payment of 2.5 per cent of the balance each month or £25, whichever is higher.

What is a representative APR?

It’s plastered on bank and credit card websites but how many people really understand what “representative APR” means?

Designed to make it easier to compare financial products such as credit cards, loans and overdrafts, the Annual Percentage Rate calculates the cost of borrowing over the course of a year, including any fees.

This is why the Amex Gold Card has a buy-in rate of 22.2 per cent but an APR representative of 56.6 per cent, due to the £140 annual fee that comes with the card.

Meanwhile, the representative means that this is the rate offered to 51 percent of accepted applicants, which means clients may end up with a higher rate.

This can be seen in some of the buy and balance transfer deals included in this guide, some customers may get an interest-free term, and others may end up with a shorter period to pay off their debts or pay off their purchases.

However, this may change in the future, as regulators increasingly deliberate on whether to publish what this means in terms of “pennies and pounds” for borrowers.

2. The best no-fee card for clearing your debt: Santander

Those who have small debts and are happy to take less time to pay them off may also be willing to consider applying for a no-fee balance transfer card as a trade-off.

For these consumers, the best option right now is Santander’s Everyday Credit Card. Like Sainsbury’s Bank, it also charges 0 per cent on purchases for the first three months, while it also has a lower annual interest rate of 18.9 per cent.

In return for not charging a fee for balance transfers, it offers a shorter time to pay off debt in the form of an 18-month interest-free deal. However, anyone making a transfer after the introductory period has expired will pay 3 per cent of the transferred balance, or £5, whichever is higher.

Applicants must have an income of at least £7,500 and cannot transfer debt from another Santander credit card.

3. Best Card for Large Purchases: Lloyds Bank

Like their balance transfer cousins, cards aimed at customers making large interest-free purchases have also seen their term lengths shrink in recent years, not least because banks are less keen to hand out ‘free’ unsecured debt during the pandemic and accompanying economic crisis.

However, some deals are still available, albeit shorter ones, and they are slowly progressing.

How about borrowing a larger amount?

A person who wants to borrow a larger amount and pay it back over a specified period of time, for example if he is buying a car or furnishing his house, may actually be better off with a personal loan that charges a lower annual interest rate.

While credit card rates are often 20 per cent or more, borrowers can get a three, five or seven year loan for £10,000 at a rate as low as 2.8 per cent.

Here are the cheapest personal loan rates available right now, according to Moneyfacts:

– £10,000 over three years – Cahoot – 2.8 per cent APR Borrowers pay back £10,432.08

– £10,000 over five years – Kahoot – 2.8 per cent in APR – Borrowers pay back £10,718.40

– £10,000 over seven years – M&S Bank – 2.9 per cent in APR Borrowers pay back £11,046.84

Lloyds Bank’s Buy and Balance Transfer Mastercard is the longest-running 0 percent no-fee combined deal on the market, according to Moneyfacts.

It offers 21 interest-free months on purchases and 18 months on balance transfers, making it an option for those settling debts as well.

It charges a 21.9 percent APR on purchases and a 2.99 percent fee on balance transfers made within 90 days of account opening. The minimum payment is 2.5 per cent of the balance or £5 per month, whichever is greater.

Card providers can cap fees, and banks’ slim profit margins mean that cash-back deals for both credit and debit card spending have increasingly disappeared.

Some supermarket deals are still available, but cashback usually comes in the form of coupons. Instead, the best everyday spending outlet comes from American Express.

The free daily Platinum Cashback Card is free, compared to the similarly named Platinum Cashback Card which comes with an annual fee of £25, and offers cashback annually provided cardholders spend £3,000 annually.

For the first three months it offers 5 per cent cash back on spending, up to £100, provided cardholders have not held an Amex card in the past two years. After that a cashback is earned at the rate of 0.5 per cent if your total annual spending is less than £5,000, or 1 per cent if it is above that.

It comes with a representative APR of 22.2 per cent, and charges the same amount on purchases, with a minimum of £25 per month.

Cardholders can also get a cashback bonus if they refer a friend to Amex and can also participate in Amex’s “Shop Small” promotions, which tend to give £5 back when cardholders spend £10 at participating retailers.

but: From August the cashback is cut off. You can read the changes here, though it doesn’t change the fact that both cards remain the best for cashback.

Amex is also one of the best companies when it comes to reward spending. Different from cashback, this makes consumers rewarded for their spending in the form of American Express points.

Often channeled through This is Money and the experts we talk to because of their versatility, this money can be converted into airline miles, hotel points, or retail gift cards through Amex itself.

One of the best ways to earn these points is through daily credit card spending on American Express cards, one of the best being the Gold Preferred Rewards Credit Card.

It comes in at a rate of 22.2 per cent on purchases but a representative APR of 56.6 per cent, thanks to an annual fee of £140 payable after the first year.

The American Express Preferred Rewards Gold Card is one of the best Air Miles cards out there

The American Express Preferred Rewards Gold Card is one of the best Air Miles cards out there

Cardholders earn 1 Amex reward point for every £2 spent on the card and 20,000 if they spend £3,000 in three months.

Another welcome bonus for those who have not held an Amex card in the last 24 months will give cardholders another 10,000 points if they spend £15,000 in the first 12 months.

However, this requires paying the annual fee, although a prorated refund can be obtained if someone pays it, collects the bonus and cancels it immediately.

The minimum payout for the card is £25 but cardholders must clear their balance if they wish to avoid eating interest charges into their reward earnings.

6. Best Card for Spending Abroad: Halifax

With the country entering the middle of winter and a nationwide lockdown to slow the spread of the coronavirus, summer holidays to sunny destinations seem far away.

However, some may hope to dispel the gloom by planning a possible post-vaccine vacation, which often entails figuring out the best way around foreign exchange fees.

Fee-free credit and debit cards are a major addition to any traveler's wallet to avoid overseas purchase and ATM fees

Fee-free credit and debit cards are a major addition to any traveler’s wallet to avoid overseas purchase and ATM fees

One of the most popular options is the Halifax Clarity Credit Card. It offers an APR for purchases of 19.9 percent and charges no fees for overseas purchases or ATM withdrawals and uses Mastercard’s own exchange rate, which is one of the closest rates to the “real” or “average market” rate consumers can get. Daily .

However, cash withdrawals abroad will still carry 19.95 percent interest from the time they are made, so cardholders who plan to withdraw a lot of cash may be better off using a no-fee debit card instead.

Minimum payment of 2.5 per cent or £5 per month, whichever is greater.

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