Pick the right plastic to carry in your wallet

1 Jul, 2015

There are hundreds of credit cards to choose from, each with different attributes, rates and benefits, and this can be confusing for consumers.

It’s important to ensure you’re getting the most from your plastic by carrying the right cards, so here are a few pointers on what to look for.

If you’re struggling to clear a balance on an existing card due to costly monthly interest charges, take a look at a 0% balance transfer card.

You can now opt for ‘interest free’ for up to 3 years with Barclaycard, Virgin Money, Halifax and MBNA. However try not to pick a promotional term longer than you really need as the longer deals tend to come with a higher one off balance transfer fee,  and can be as much as 3% of the balance switched in some cases.

If you pay your card off in full every month when you receive your statement, the interest rate isn’t really an issue. If this is the way you manage your card account, try and find a card that’ll give you something back by way of cashback or rewards. The Santander 123 card charges £2 per month but comes with attractive cashback of up to 3% on some spend, alternatively take a look at the Platinum Cashback Everyday card from American Express with no monthly fee and cashback of 5% in the first 3 months (maximum £100 cash can be earned in this period).

If you’re not interested in promotional offers or freebies and just want a good value card that won’t break the bank if you don’t repay your full balance every now and again, there are a couple of cards worth considering. Halifax (and Lloyds Bank) offer a Low Rate Card charging 6.4% APR and MBNA has a similar deal at a very competitive 6.6% APR.

Both cards are far cheaper than the market average of around 18.9% APR, plus the MBNA card allows you to transfer funds direct to your current account and so is a smart low cost way to clear expensive overdrafts or loan balances.

There’s nothing wrong with carrying three or four cards in your purse or wallet, as long as you make the best use of the features of each to keep your borrowing costs to a minimum.