We’re expected to spend a massive £100bn on our credit cards during the summer months.
One way to ease the pressure is to take out a card that charges no interest on purchases ? but be aware of the traps.
A year ago, there were scarcely any cards offering 0% for more than three months, but now the situation is easing.
‘In the past few years, worries over the credit crisis and rising unemployment meant card providers severely cut back on offers,’ says Michelle Slade, of financial researcher Moneyfacts.
‘Now the market has improved, credit card companies are showing they are back open for business by launching a range of competitive deals.’
The longest offers come from the Virgin 12/12 card and Sainsbury’s Bank, which have no interest on purchases or balance transfers for 12 months.
›› Compare credit cards and apply for a new deal
This avoids the problem with many other deals that offer a longer 0% period on balance transfer than on purchases.
So when the interest-free purchase period ends, all of your repayments clear the cheaper debt first, the transferred balance, while your spending racks up interest, often at up to 20%.
The offer from Sainsbury’s is only for those with a Nectar card.
You can also earn double reward points on all your shopping in the supermarket when you use your credit card.
Barclaycard and Tesco Bank have interest-free deals for 12 months on purchases.
Just because you’re not racking up interest doesn’t mean you can go wild. You still have to pay off the minimum balance each month.
If you don’t, you will have broken your agreement and the interest-free period can be taken away instantly and you’re likely to be fined.
Once the deal ends, you’ll be charged interest ? so try to cut the amount you’re spending each month so you can clear your debt by then.
Alternatively, you could then move on your borrowing to an interest-free balance transfer card. The danger is that since credit card providers are much more cautious, you may be rejected.
In this case, you’ll find the interest rate is steep.
Virgin, for example, charges 18.9% and Sainsbury’s is 15.9%. However, these are only typical rates and you could be charged far more based on the lender’s risk assessment of you.
‘Remember, the key with credit cards is to pay off your balance within the initial introductory offer period,’ says Andrew Tate, of BeatthatQuote.com, which powers MailCompare.
‘If you don’t, you’ll have lost all the benefit of the 0% deal within a few months.’ For holidaymakers who clear their balance every month, cards that don’t charge a foreign currency usage fee are the best bet.
The vast majority charge nearly 3% every time you buy something abroad with them. But the Santander Zero card and credit cards from the Post Office and Saga don’t levy hefty charges overseas.
The Saga card is available only to those aged over 50. It offers 0% on purchases and balance transfers for nine months and then has a low rate of 11.9% after that.