The Rate Tart

Let me start by saying that everyone's circumstances are different. With that disclaimer firmly in place, let's talk turkey.

Say you spend around £1,000 a month on credit cards, and you can afford to pay off this amount in full every month. Over a year, a cashback credit card will leave you more than £100 worse off than a 0% on purchases card.

Here's the maths. A yearly spend of £12,000 on a typical cash back card would earn me 4% cashback for 3 months and 1% for 9 months. Assuming I pay off the total debt each month, that would give £210 cash back.

The same spend on the Natwest 0% credit card paying a minimum of 2% of my balance each month would mean that I need to make payments of £1,236. At the end of the 12 months, I'd need to make a final payment of £10,764 to clear the outstanding balance.

So, instead of paying in £12,000 over a year, I can pay just £1,236 and invest the rest in high interest savings account. Assuming I used the IceSave account at 6.30% AER, this would earn me more than £300 over the next twelve months and make me more than £100 better off.

Of course, this is a more risky strategy and means I have to be on the ball with my repayments. Equally, I have to avoid the temptation to withdraw cash, use credit card cheques and overspend because if I did, I'd end up paying fees and charges. And that would quickly overtake my £100 saving.

Have you been charged a penalty fee by a credit card company within the last six years (or five years in Scotland)? If so, you can get your money back.

So what can be reclaimed? Fees for paying late or exceeding your credit limit can be reclaimed. If you've done this a lot over the years, you may be able to get a tidy sum back.

There has been some confusion about this being on hold. Whilst its true that there is a test case pending for bank charges at the moment, this doesn't effect credit cards.

Equally, it has been suggested that credit card companies have been forced to reduce their charges already. This followed a judgement by the Office of Fair Trading in April 2006 that said penalty fees above £12 for credit cards were unfair. Since most credit card companies were charging £35, they lowered their fees.

This opens up an argument in your favour if you want to reclaim charges. It means you can claim that any fees before the reduction were unfair, and so asking for the difference between the £35 you were charged and the £12 back is straightforward.

Don't be put off because you think this is a difficult process: in most cases it involves writing a couple of letters. Check our TheRateTart guide to reclaiming credit card charges, and the sample letters there to find out how.

Even if the banks say no, you don't need to go to Court. You can appeal to the Ombudsman who can decide on these matters for you. Best of all, its free.

There are lots of places advertising 0% credit card deals. It's practically impossible to watch daytime TV without seeing adverts for credit. The business of selling money is big business.

That's because credit cards make huge sums of money for providers, and they're willing to fund the industry of attracting new customers.

But before you apply for a 0% credit card, here's something you should consider. When you apply for a credit card, companies check your credit score. And they have carefully designed processing rules that are designer to point out customers who will cost them money. If it looks like you are desperate for money and have applied for lots of credit in a short space of time, you may end up getting refused for a 0% credit card.

So its worth comparing products. You can find online guides from respected sites that offer views on how to pick the right type of card for you. And when by choosing the right card for you before you start to fill forms in, you won't need to waste your time or run the risk of harming your credit rating.