Christmas Play Your Cards Right
Christmas is nearly here, and for many this means spending more than usual on credit cards. You may think that all credit cards are the same. But in reality picking the wrong card can leave you severely out of pocket. Follow TheRateTart's seasonal tips and follow your Merry Christmas with a Happier (and Wealthier) New Year.
If you pay off your balance in full each month the best option is a cash back or rewards credit card. These cards pay out a percentage of your overall spending, usually on the anniversary of the account opening. Both Morgan Stanley and American Express are offering introductory 3% deals at the moment.
If the festive season has you feeling all altruistic go for a charity card. These apply the same basic principles as cash back or rewards credit card, but the money is donated to a named charity rather than the account holder. Of course, this means it is clearly your moral duty to indulge in that one extra present for yourself.
Because both cashback & rewards and charity cards tend to come with relatively high interest rates, it's important only to use these if you can pay off the entire balance each month. Otherwise you will pay more in interest than you get back in rewards.
If you will be spreading the cost of Christmas well into the New Year the best bet is a credit card with a 0% on purchases introductory offer. Effectively you are getting an interest free loan for items bought within the introductory period. If you have already done the Christmas shopping on a card with a high interest rate, consider transferring your spending to a credit card with 0% on balance transfers.
Although you will probably have to pay a balance transfer fee, this is still likely to save money compared to a standard APR card.
With both these cards it is important only to use them for their promotional features. This is because any other spending is likely to be charged interest at a higher rate. But any payments you make are likely to be used to pay off your interest free borrowing, leaving the most expensive debt to attract interest for as long as possible.
The secret to successful financial management is to review your products regularly and make sure you always have a competitive deal. By registering with TheRateTart you can set up free email reminders to alert you when promotional offers are expiring, or just when it's time for your regular financial check up.
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