What is the best credit card for Christmas shopping in 2014? Read our Christmas savings guide to learn more
Christmas can often be the most expensive time of year with families spending hundreds, if not thousands, on gifts and food, not to mention travel, decorations and ensuring the festivities run smoothly.
For Christmas shopping in 2014, many people will turn to loans and Christmas savings clubs, but there are some alternatives that could give you a better return on your hard-earned cash.
Credit cards for Christmas shopping 2014
Before applying for a credit card to help with the Christmas spending, it’s a good idea to assess your circumstances and figure out what you hope to do.
Some people will be looking to save money, get better protection on their purchases, get some cashback or alleviate the burden of the debt they might get.
However, those with very bad credit and low incomes may be better off turning to a credit union or even seeking debt advice if things are getting out of control in the run up to Christmas.
Cashback credit cards for Christmas
If you’ve got a good credit rating and you’re able to pay off your balance on time every month, then it’s worth getting a cashback credit card for Christmas.
The spending at Christmas is usually much higher than during other times of the year, so if you are going to be making big purchases, you may as well pick up some cash in return.
Some of the best introductory cashback credit card offers last for around three months, which can be an ideal time frame for doing your Christmas shopping and making the most of the January sales.
The American Express Platinum Cashback Everyday Card offers 5% cashback on all purchases in the first three months.
Although this is capped at £100, you can continue to earn cashback at a rate of 0.5% up to 1.25% after the introductory credit card offer to help give you a decent-sized end of year bonus for all your shopping.
The Santander 123 Cashback Credit Card will give customers cashback on a variety of purchases.
Customers will also get 1% cashback at all major supermarkets, 2% cashback at all major department stores and 3% cashback at all major petrol stations and on public transport tickets (National Rail and Transport for London).
The annual fee of £24 can be quickly made up within a few months on your weekly grocery shop alone.
For those with the 123 Santander Current Account, you don’t have to pay the annual credit card fee if you sign up before the end of the year.
For those deemed to have bad credit, cashback credit cards tend to be harder to get than the specific credit builder credit cards.
However, the Capital One Classic Extra is a credit card for people with bad credit that also rewards them with 0.5% cashback on all purchases.
On top of this, this credit card rewards customers with a £10 annual bonus if they pay their balance on time.
0% credit cards for Christmas
Cashback credit cards are great if you can afford to pay off the balance at the end of each month.
For those who can’t afford to do that but still have a good credit history, 0% credit cards can be a better option.
If you are planning big purchases for Christmas but would like the flexibility of being able to pay it off over a longer period, then there are some 0% credit cards with interest-free periods spanning up to 18 months.
The Tesco Bank Clubcard Credit Card for Purchases gives customers 0% interest on purchases for 18 months.
With the right planning you can do all of your Christmas shopping in the first month and give yourself nearly a year and a half to pay it back.
On top of this, you can build up Tesco points from all of your purchases (1 Tesco Clubcard point for every £4 spent in any shop).
Those with limited credit histories or in need of rebuilding their credit status, there are still some 0% credit cards available.
The Barclaycard Initial is a 0% credit card for people with bad credit, but not those who’ve been declared bankrupt in the past 6 years or those with multiple County Court Judgements).
With this credit card you get zero interest on purchases for the first three months while also building your credit rating.
Consolidating Christmas debt with a credit card
The best balance transfer credit card offers can really help you manage your post-Christmas credit card debt.
It’s safe to say that it’s best to avoid going into the red, but the reality is that many people will have amassed debt over the Christmas period.
Balance transfer credit cards, for a fee, will allow you to move your debt to a 0% credit card, allowing you to pay it off over a period up to 30 months.
The new Barclaycard Platinum with 30 Months Balance Transfer is the longest ever balance transfer credit card and has a fee of 2.9% (initially 4.9% but this will be refunded if you follow the basic terms and conditions).
This means a balance transfer of £5,000 would cost £245, but you’ll be refunded £100, making the handling fee a relatively small 2.9%.
However, if you’re already with Barclaycard and want to transfer that debt over to a similarly lengthy balance transfer credit card, then the Tesco Bank Clubcard Credit Card for Balance Transfer could be right for you.
With 28 months on balance transfers, a 2.9% fee, and three months 0% interest on purchases, plus the ability to earn Clubcard points on all spending, this Tesco credit card has a range of benefits to fit a variety of circumstances.
If you’re looking for a low fee balance transfer credit card, then the Fluid Low Fee Card has one of the lowest on the market.
At 0.75%, customers will only pay £37.50 to transfer a balance of £5,000, which they can pay off over a period of 12 months.
You can compare the rest of the market’s balance transfer credit cards using our credit card comparison tables.
Protection on purchases and credit card alternatives
Many people will turn to their Christmas savings account if they signed up to a Christmas savings club a year earlier.
Companies such as Park Christmas Savings allow people to put away money each week in order to save for gifts.
Such clubs may seem like an easy way to save money, especially if you have bad credit and can’t open up a decent savings account, but there are far better ways to make a return on your patience and investment.
A personal loan may not be open to those with bad credit but it’s worth checking out some of the peer to peer loans that are offering some of the most competitive rates on the market.
If you are thinking of getting a Christmas loan, then you may wish to consider if a 0% purchase credit card can’t offer you the same thing.
Credit unions are worth speaking to if you’re thinking of getting a Christmas savings account, as it’s important to note that you’re unlikely to grow any of your investment in a Christmas savings account.
You won’t get a highly competitive rate from a credit union on your savings, but it will be far higher than with a Christmas savings account.
Plus credit unions are regulated by the Financial Conduct Authority and the Prudential Regulation Authority, whereas Christmas savings account companies are not.
Another issue you could have with a Christmas savings account is that your cash is returned to you in the form of gift vouchers.
If any of these businesses go into administration or fall into major financial trouble, one of the first things they could do is stop accepting gift vouchers, leaving you short changed after months of saving.
Credit cards are covered by the Consumer Credit Act, which means that all purchases between £100 to £30,000 will be protected if something goes wrong.
It’s worth looking around to consider your options properly, but it all comes down to finding a product that suits your financial circumstances.