Why you need to think carefully about what card you pay with


Updated on 29 August 2019 | 0 Comments

Deal-hunting is all good and well, but paying in the right way is just as important. You can get extra protection, earn cashback and even get discounted prices by choosing the right payment option.

Whether it’s Amazon Prime Day, Black Friday or one of the many other ‘special’ shopping days that take place each year, there are many opportunities to pick out a few bargains.

But shopping around for a good deal is only half the game.

You also need to think extremely carefully about precisely how you go about paying for any items too.

Failure to do so may mean that you end up worse off, even after taking the time to shop around for a good deal.

Compare a range of credit cards at loveMONEY

Woman shopping. (Image: Shutterstock)

Getting something for nothing

If you’re the sort of person that always clears their credit card balance in full each month, but you’re using a standard card for spending, you’re essentially throwing money away.

There are many cards available that offer real rewards to cardholders every time they spend.

This may be in the form of loyalty points for schemes such as Clubcard and Nectar.

Every time you shop, you earn points based on how much you’ve spent, and you can then put those points towards a host of rewards with partner retailers.

The best UK supermarket loyalty schemes: Tesco, Sainsbury's, Morrisons and more

Alternatively, you might opt for an airmiles card, so that all your spending goes towards cutting the cost of next year’s holiday.

Or, you could even choose a cashback card that rewards your spending with a portion back in cold, hard cash.

By putting all of your spending on these cards, you can ensure that as well as saving money by shopping around, you get something extra back when you do spend money. 

Don’t be tempted to overspend

There are a couple of really important things to bear in mind.

You really do need to make sure you clear the balance in full each and every month.

Otherwise, the interest charged on your outstanding balance may quickly wipe out the value of any rewards you build up.

Also, just because you are getting rewarded when you spend, don’t be tempted into spending more than you usually would or can afford.

Getting into money trouble in the hunt for bigger and better rewards is just not worth it.

People with shopping bags. (Image: Shutterstock)

Spreading the payments

If you’re buying something expensive like a new computer that you want to pay off in stages, then you’ll want to find a way to do this without being charged extra for the privilege.

With a normal credit card, you’ll be charged interest on your outstanding balance each month. So, any money you’ve saved by shopping around may be gradually eroded by the interest charges on your leftover debt.

That’s where a 0% credit card comes in handy. A 0% purchase card charges no interest on any new spending on the card for a certain period, in some cases for over two years.

You can then happily pay the balance off in stages, knowing that every penny is directly reducing the size of the debt, rather than disappearing on interest.

The best 0% purchase credit cards

A 0% balance transfer card works in a similar way, but with balances moved onto the card.

So, you can spend on your normal credit card and then transfer the sum over to the balance transfer card.

While interest-free periods can stretch even longer on some of these cards, you may need to pay a transfer fee, which is a percentage of the sum being transferred.

With all 0% cards it’s crucial you work out exactly how much you need to pay each month in order to clear the balance before you start being charged interest, and then stick to it.

The best low-fee and fee-free 0% balance transfer credit cards

What if I have a bad credit record?

Of course, the best rewards and 0% offers are reserved for borrowers with spotless credit scores.

If you have a less than perfect credit history ‒ or no credit history at all ‒ then you may struggle to get your hands on a credit card with decent rates.

But even for people in this situation, it pays to think carefully about how you pay as a credit builder card could be a great option.

These cards are designed to help people with less than rosy credit histories improve their credit score.

By using them whenever you can, you’ll speed up the time it takes to get your score back in shape, meaning you may then be able to qualify for the best cards around.

What’s more, some credit builder cards offer rewards when you spend with them.

For example, Tesco’s Foundation Credit Card allows you to collect Clubcard points in the same way as its mainstream cards.

Best credit cards if you have a bad credit history

Person using card online. (Image: Shutterstock)

The benefits of cashback

It’s also important to remember to check whether you can bag any cashback on your spending when shopping online.

You go to your cashback site of choice such as Quidco or TopCashback, and search for the retailer you plan to shop with.

If the site has a relationship with them, you can follow a tracked link over to the retailer. You’ll then get a percentage of your spending back in the form of cashback.

While the cashback itself is quite small, if you do it every time you shop online, it can really add up ‒ I’ve pocketed hundreds over many years from doing it.

In a bid to prevent myself forgetting, I’ve installed TopCashback’s Notifier tool on my browser, so any time I’m on a shop’s website it lets me know what rate of cashback I could get by shopping with them via a TopCashback link.

The best cashback credit cards

If you aren’t getting something back, you’re doing it wrong

It doesn’t really matter whether you have the shiniest of credit ratings or one that can best be described as a ‘work in progress’ ‒ if you aren’t getting something back from the card you’re using to pay with, then you may be doing it wrong.

Whether it’s a juicy interest-free period, loyalty points, cashback, or a helping hand towards boosting your credit score, your card choice can offer you a lot more than simply allowing you to pay for stuff.

*This article contains affiliate links, which means we may receive a commission on any sales of products or services we write about. This article was written completely independently.

 

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