Five super all-round credit cards
Tired of using several different credit cards for different purposes? These credit cards provide the perfect solution...
I don't know about you, but I've spent these past few weeks trying to understand all the different numbers whizzing round my head.
In my world, there's one credit card bill, four figures, three possible holiday destinations, and more importantly, one looming balance transfer expiry date.
Here at lovemoney.com, we've always said that a 0% balance transfer credit card can do wonders for sorting out your finances. As Jane Baker recently pointed out, the potential savings could be huge, and there are lots of cards to choose from.
However, I'm sure your spending habits don't suddenly stop up after Christmas, and you may also want to use your shiny new credit card for purchases too. So instead of diving-in for a balance transfer card, why not opt for a different solution?
If you're planning to spend big in the near future, such as expenses for a wedding, a holiday, or you simply want a breather from those credit card bills, a 0% purchase card is probably right for you.
Unfortunately, these cards are becoming harder to come by, as providers clamp down on their previous generosity. However, every cloud has a silver lining, and more 'all in one' credit cards have started to pop up on the market.
Here's the pick of the bunch at the moment:
|Card and provider||APR||Promotional period||Other|
|Sainsbury's Finance MasterCard||15.9%||10 months interest free on balance transfers and purchases (12 months interest free on Sainsbury's pruchases)||Two Nectar points for every £1 spent at Sainsbury's during the first two years. One point for every £5 spent in store after.|
|Halifax All in One MasterCard||15.9%||Nine months interest free on balance transfers and purchases||n/a|
|Bank of Scotland All in One MasterCard||15.9%||Nine months interest free on balance transfers and purchases||n/a|
|Saga Platinum Credit Card||11.9%||Nine months interest free on balance transfers and purchases||0% commission on overseas spend within Europe. 1% commission elsewhere.|
|John Lewis and Waitrose Partnership MasterCard||16.9%||Six months interest free on balance transfers and purchases||Earn one point for every £1 spent in John Lewis, Waitrose, Greenbee and at Ocado. Earn 1 Point for every £2 you spend elsewhere.|
All-in-one credit cards have long been a favourite of mine. This is because they allow you to combine the benefit of 0% on purchases and balance transfers, meaning you avoid a negative order of payment.
Negative order of payment
Cards which operate a negative order of payment allocate payments to your cheapest debts first. So, if I transfer a balance onto a 0% balance transfer card, make a £100 purchase on the same card, then make a £100 payment, this payment will go towards the interest-free balance transfer, and not my purchase (which starts to rack up interest).
Some providers lure into this trap by offering deals with uneven promotional periods, such as 0% for 12 months on balance transfers, but only 0% for three months on purchases.
This means once the first three months are up, your purchases are no longer interest-free. As the debt is also now more expensive, any payments you make will go to the cheaper balance transfer, NOT the expensive purchases, leaving you in a cycle of debt you can do nothing about until the balance transfer is paid off.
Some providers like Lloyds TSB won't even give you a credit card unless you force yourself into its negative payment hierarchy trap. One of the terms of its 0% balance transfer deal is that you spend at least £100 during the first three months.
All-in-one cards offer reassurance because they come with equal balance transfer and purchase periods, meaning you don't need to worry about a negative order of payment.Similarly, Saga, Nationwide and the Co-op operate a postive order of payment system, where your most expensive debts are paid off first, saving you interest.
Supermarkets on top
Sainsbury's leads the way when it comes to the all-in-one package, offering 10 months interest free on balance transfers and purchases. In addition, the card offers up to two points for every £1 spent with Nectar partners, and one point for every £1 spent elsewhere.
Saga also currently offers nine months interest free on balance transfers and purchases. It also offers no foreign transaction fees on purchases made in Europe, and just 1% anywhere else in the world. And remember, Saga operates a positive order of payment system.
Of course, the compromise you'll have to make to enjoy this interest-free life on all sides is a quicker expiry date on the 0% period.
If you want a credit card for just purchases, then the Tesco Clubcard credit card offers 12 months interest free on all purchases, although if you also want to transfer a balance, you'll only get six months grace.
On the other side of the coin, if it's a longer balance transfer you're after, nothing beats the Virgin Money MasterCard. With 16 months interest free on balance transfers (2.98% fee applies), you won't have to pay a penny in interest until May 2011.
Compare credit cards at lovemoney.com