This Christmas you can use a credit card to pay for presents, food and drink and earn cashback, rewards or points for essential spending that you are not going to be able avoid.
Most of us can’t or don’t want to rein in a certain amount of festive spending, especially if you have children.
So this Christmas, it makes sense to make your spending work for you and to get something back in the form of a rewards or cashback credit card.
Or you can choose a credit card that has the longest interest free period attached to it so that you can pay for your Christmas costs over a longer period withot incurring interest.
We all have our own budgets for what we can spend at Christmas but whether you are spending closer to £1,000 or closer to £100, it makes sense to earn what you can back from your Christmas spending.
Many families will have to use a credit card just to be able to afford the presents, nights out, decorations and food and drink for the festive period.
You need to consider how often you will use the card and which type of reward will be most useful to you.
Kevin Mountford, head of banking at MoneySupermarket.com, said: "Every reward or cashback card offers cardholders something different. As such, anyone looking to use one of these cards needs to work out what sort of rewards suit their personal circumstances and shop around for the best deal.
"Anyone thinking about taking out a reward card needs to be disciplined and ensure they are paying off the full balance each month, ideally by a direct debit, to avoid getting stung by interest charges."
In this feature we will look at the best cashback and rewards credit cards whilst also selecting the two best cards that charge nothing on purchases for the longest period so you can spread the cost of Christmas over a longer period if you need to.
It can take up to six weeks to receive your credit card so you need to apply as soon as possible to have a chance to get your credit card before Christmas.
Whatever you do, make sure you don’t pay any interest on your purchases. We’ll select the best deals to make sure that you should not have too.
When you are buying lots of presents a credit card is a good bet because you are protected under the Consumer Credit Act for items costing between £100 and £30,000 if the goods you purchase are lost, faulty or stolen.
Barclaycard Cashback card – This card offers customers a top rate of six per cent cashback in the first three months on your top five purchases. You can earn up to a maximum of £120.
This means if you spend a total of £2,000 on five separate items you will save yourself £120.
After this initial offer the card pays two per cent cashback on your top five purchases each month and 0.5 per cent on all other spending.
The card also offers a bonus that boosts the cashback on your top five purchases in the month of the anniversary of when you took the card out of four per cent.
However, the card does have a fee of £24 per year. Its normal interest rate of interest is 19.9 per cent, so you must pay off the balance each month or the interest you are charged will outweigh the benefits.
American Express Platinum Cashback card – This credit card pays five per cent cashback on the first £2,000 you spend in the first three months.
After that you earn 2.5 per cent cashback on all purchases. The card has an annual fee of £25 but the interest rate is lower at 14 per cent.
Capital One Aspire Elite – This offering allows you to earn five per cent cashback on everything you buy for the first 99 days you have the card up to a maximum of £200.
After this introductory period you receive one per cent cashback on subsequent purchases up to the next £15,000 and then two per cent cashback on purchases above £15,000, up to £50,000 and then 1.35 per cent on all purchases in excess of £50,000.
These rates apply for the first year and then you earn one per cent on cashback until you pass each purchase threshold again.
Rewards for all spending
Santander 123 – This credit card doesn’t have an introductory offer but you can earn three per cent cashback at all major petrol stations and on National Rail and Transport for London Travel. There is a £300 cap on petrol and travel spends each month.
The card also allows you to earn one per cent cashback on spending at all supermarkets and two per cent on spending at department stores.
Aqua reward – This credit card gives you back three per cent cashback on all purchases as long as you do not exceed your individual credit limit and pay off your balance on time.
Make sure you pay off the balance in full each month because the interest rate is double the average normal rate, coming in at a whopping 34.92 per cent APR.
Read more: The cheapest credit cards for 2012
Rewards for supermarket spending
Barclaycard Freedom Reward Card – This card offers points on spending which you can put towards shopping vouchers.
You can earn up to 10,500 points which works out at £30 worth of vouchers if you spend up to £500 in the first three months.
You also get double points on fuel and supermarket spending which means it is easier to get the points you need to qualify for the vouchers.
Sainsbury's Nectar Credit Card – If your supermarket of choice is Sainsbury’s then this card could be a good option. It gives you double Nectar points on shopping online, in store and in Sainsbury’s petrol stations for the first three months.
You need to pay off the balance each month or you will be charged interest at 17.9 per cent.
Co-operative Bank Members credit card – There is no introductory offer on this card but you will earn 1p for every pound you spend in the Co-op supermarket and for every £2 you spend anywhere else.
All the cashback that you earn will be added to your share of the Co-operative Group’s profits and this will be paid to you bi-annually.
Zero per cent interest on purchases
Tesco Clubcard Credit Card – For interest-free spending with the longest period to pay back your debt without incurring interest this card is top of the pile.
You get 16 months interest-free to pay off your balance before it reverts to a rate of 16.9 per cent APR and it gives access to an enhanced Tesco Clubcard rewards scheme. You also get a nine month’s interest-free period on balance transfers for a 2.9 per cent fee based on the balance you transfer.
Halifax All In One card – This one offers 15 months interest-free on purchases and offers a similar interest-free period on balance transfers subject to a three per cent fee.
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