 |
 |
By Sarah Wray
Staff Writer
Monday, 9 June 2008
|
Fill Your Wallet With a Crack Squad of Credit Cards
Our Recommendations for the Best Credit Cards in Each Category:
Related Personal Finance Features and News
See our other recent related news stories:
How to avoid credit card rejection
Being rejected for a credit card can hurt more than your feelings, writes Donna Jennings, it can hurt your credit rating too. So make sure you know how to avoid credit card rejection altogether.
Credit cards the only way to book DIY holidays
If you are shunning the package holiday companies this summer and booking your flight and hotel independently, you should only use your credit card to make the booking or you could find yourself on the wrong side of a cancellation expense.
|
SOME people virtuously brag that they only have one credit card, with the assumption that this shows they are financially prudent and ‘good with money’. However, having more credit cards can be better than having less.
That's not as crazy as it sounds.
No single credit card is able to provide the best of everything, whether it be balance transfers, low purchase rates, no foreign transaction fees or a generous cash-back offering.
Get a crack squad of cards
So rather than try and find a jack-of-all cards, but master of none, you should fill your wallet with a crack squad of top-of-the-range credit cards.
Each credit card in your wallet can cover a different base. Use the right card in the right situation and you’ll be getting the best deal all-round.
Obviously you’ll only get the best deal if you are paying no interest.
Only use credit cards when you know that you can pay the balance off in full and on time, or if there is an interest-free or low interest period.
If you’re a spendthrift, more credit cards will just mean more maxing out and this system definitely won’t work for you. In fact it could see you get into a lot of financial difficulty.
The right tools for the job
Every skilled credit card juggler should have the following cards in their wallet:
- Low Purchase Rate Card
Everyone should keep a Low Purchase Rate credit card in their pockets and ONLY use it when they desperately need to and know that they will not be able to pay the balance off immediately.
It is a long term keeper card for emergencies and will at least charge low rates of interest when the bill comes in.
 Compare Low Purchase Rate credit cards and find the best low purchase rate credit card.
- Cash Back card
Use a cash back card for all your spending that you’d do anyway such as groceries and other household shopping.
You can also use it to pay bills, holidays, petrol, and just about anything else.
Naturally, you’ll need to set up a system to ensure you pay it off promptly every month.
The amount of cash-back you could possibly earn in a year can stretch into the hundreds of pounds.
Compare Cash Back credit cards and find the best cash back credit card.
- Use Abroad card
Having the right credit card for travelling can save a fortune in foreign transaction fees.
Everyone should have a credit card for foreign travel and use it only when they are on holiday.
Compare credit cards for use abroad and find the best credit card for travelling.
- Balance transfer card
If a debt has been racked up elsewhere, it makes sense to shift it as soon as possible to a balance transfer card.
The transferred balance allows you to slowly pay off the debt without being crippled by interest rates, but remember to be careful about transfer fees and any other hidden costs.
ChooseMoney.co.uk's 0% Balance Transfer Credit Card comparison tables highlight all the relevant hidden costs to help you make an informed decision.
Think about whether you’d be better off with a 0% balance transfer or a Life of Balance transfer card instead.
These cards shouldn’t be used for spending as well as the interest for spends is often much higher than for balance transfers.
Compare Balance Transfer credit cards and find the best balance transfer credit card.
- 0% purchase rate card
If you are planning to make a big purchase and know you cant pay it off immediately (or, say you want to pay off Christmas over 12 months, for example), apply for a 0% Purchase Rate card and pay the large purchase off over the interest free period on the card.
Compare 0% purchase credit cards and find the best 0% purchase credit card.
Working the system
If you’re going to be using a number of cards you need to have a system in place to ensure that everything gets paid off on time.
If you’re not organised you could end up losing the key money saving benefits of having more than one card.
Use a calendar, use mobile phone alerts, a set credit card payment date each month, knots in a hanky… whatever works for you – just make sure you always pay your cards on time and don’t accrue a penny of interest if you can help it.
A cautionary tale
It’s best to build up your fleet of cards over time, rather than applying for them all at once.
A flood of applications could damage your credit rating.
Similarly, if your credit rating isn’t perfect, be very wary of applying for a card you don’t fit the criteria for as a failed application could worsen your credit rating.
|
