It's rash to take on too much debt in tough times, but there's no doubt that there's some fantastic credit cards available at the moment. If you use the cards carefully, now is the best time ever to take out a credit card.
0% new purchases cards
If you want to spread out the cost of a big purchase, 0% new purchase credit cards can be very useful.
The best deal on the market is from Nationwide - offering 18 months before interest is charged on new purchases. The 0% balance transfer period lasts for 17 months while the balance transfer fee is 2.95%. You’ll also get 0.5% cashback on purchases and unlimited commission-free purchases abroad.
The only drawback is that you have to be a Nationwide FlexAccount customer to get one. It’s a decent current account, so worth thinking about if you’re planning to switch anyway. The card will be available to customers from January 17th.
The best deal available to everyone is the Halifax All in One MasterCard. If you took one out and made a big purchase on the same day, you wouldn’t have to pay any interest on the resulting debt for 15 months.
And Halifax isn’t the only card you could use. You could get 15-month 0% periods with both the Tesco Clubcard MasterCard and the Marks & Spencer Credit Card.
We've extolled the virtues of 0% new purchases cards many times before, but what’s different now is the quality and range of cards that are available. A few years ago, we used to get excited about cards that offered 12-month interest-free periods, but now there are now three cards with 15-month periods and one offering 18 months.
In fact, I can’t ever remember seeing a no-fee 0% purchases card with a 0% period lasting longer than 15 months. I was worried that my memory might be faulty on this point, so I asked our friends at Moneyfacts to have a look in their database. They have no record of a longer 0% period either.
So I’m in no doubt - now is the best time ever to get a 0% new purchases card.
[Useful: See the top 0% new purchase cards]
Cashback cards
It’s a similar story when you look at cashback credit cards. There have been plenty of good cashback cards available in the past, but it’s unusual to see three strong competitive cards on offer at the same time.
If you want to get a chunky introductory offer, go for the Capital One World MasterCard. You’ll get 5% cashback on all your spending for the first 99 days you have the card.
Heavy drivers should look at the Santander 123 card as it will give you 3% cashback on your petrol purchases.
Big spenders should consider the American Express Platinum Cashback Card which pays 2.5% cashback for the first three months you have the card, then 1.25% thereafter. What’s more, the cashback rate goes back up to 2.5% for a month every year – as long as you spend at least £10,000 a year. So this card is a great option for affluent folk.
You do have to pay an annual fee for the Santander and Amex cards, but I still think they’re great cards and I struggle to remember a time when there was such a strong range of cashback cards available.
[Useful: The top cashback credit cards]
0% balance transfer cards
I’m also very impressed by some of the balance transfer cards you can get at the moment. Look at these beauties:
Top 0% balance transfer cards
|
Card |
0% balance transfer period |
Balance transfer fee |
‘Revert to’ interest rate |
|
24 months |
3.2% fee |
17.9% APR |
|
|
23 months |
3.3% fee |
17.9% APR |
|
|
22 months |
2.9% fee |
17.5% APR |
|
|
22 months |
3.5% fee |
17.9% APR |
|
|
16 months |
1.6% (after a rebate) |
18.9% APR |
As with purchase cards, the length of the 0% periods for balance transfers is exceptionally long. I can’t ever remember seeing a 0% balance transfer card with a longer 0% period than 24 months.
The only downside is that all these cards charge fees when you make the transfer. Back in the early noughties you could easily get a 0% balance transfer card with no fee. So you might argue that this isn’t the best time ever to get a balance transfer card.
There’s something in that view, but let’s not forget that the Barclaycard Low Fee Platinum Visa only charges a 1.6% fee and offers a 16-month 0% period. Back in the days of no-fee cards, the interest-free periods tended to be much shorter, so I think you can make a strong case that now is the best time ever to take out a 0% balance transfer card.
And when you look at the credit card market as a whole, I’m in no doubt. There’s never been a better range of credit cards on offer.
Two caveats
Before I finish, I should add two caveats.
Credit cards can, of course, be very dangerous. If you spend more than you can afford, your debt can spiral out of control and then you’ll be in a right mess. The golden rule is that you should always pay off your credit card bill in full every month.
The only exception to that rule is if you have a 0% purchases card. If you pay off the debt in full at the end of the first month, you’ve pretty much rendered the whole exercise pointless! With a 0% purchases card, it’s best to make monthly payments into a savings account – then you’ll definitely be able to pay off the debt at the end of the 0% period.
The other important caveat is that not all applicants will get these cards. Credit card providers are likely to cherry pick the applicants with the best credit records.
That’s a shame, but the reality remains that there is a fantastic range of cards available at the moment. I think it’s the best time ever to get a credit card.
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