As we hurtle towards the budget-busting festive season, it is as good a time as any to take stock of the pieces of plastic in our wallets that many of us rely on.
The best credit cards can help you boost your credit score, clear your debts faster, spread the cost of an expensive purchase and even earn a tidy sum in airline points or cashback.
Pick the wrong one, however, or fail to manage it correctly, and you can be left with a hefty bill and a credit rating in tatters.
Choosing the right credit card can make a meaningful difference to your spending power and your ability to budget. Just remember to pay it off each month to avoid charges
So whether you are looking for cashback on your everyday spending, points to put towards your next flight, an interest-free balance transfer to help clear debts, or a card that doesn’t charge you for usage abroad, the right credit card could be a game-changer.
This is Money has scoured the market and picked out the best credit card deals to help you make the most of your money.
We have chosen these cards because we think that they offer something that makes them stand out from the crowd.
While they may not always have the absolute lowest rate or the longest special offer, our independent research has shown that they represent a good deal.
Best for cashback
Perks: There is no monthly or annual charge on this card.
It gives 5 per cent cashback on all spending for the first three months of card membership, up to a maximum of £100.
Each year thereafter, you’ll receive 0.5 per cent cashback when spending up to £10,000 and 1 per cent cash back on everything you spend after that.
As long as you spend a minimum of £3,000 in each given year, every full £1 you spend on purchases qualifies for cashback.
Warning: If you fail to pay it off each month you’ll be hit with a 24.5 per cent APR.
In addition, some UK retailers don’t accept Amex due to the fact that it charges them around 3 per cent for each sale they make.
Being aware of where you can and can’t use your American Express card is important – you can find out the places that accept Amex here.
There are now very few major chains that don’t accept it, but you are much more likely to have an issue when in smaller shops throughout the UK.
However, some notable organisations still don’t accept Amex including Tile Giant, Dunelm and Sky.
The American Express Platinum cashback everyday credit card currently offers 5% cashback on any purchases for the first three months of card membership, up to a limit of £100
Credit card: American Express Platinum cashback credit card
Perks: Another offering from American Express, this card pays 0.75 per cent cashback on spending up to £10,000 and 1.25 per cent for everything over that amount in a given year.
Like the ‘everyday’ card detailed above, it offers 5 per cent cashback for the first three months – but with a higher limit of £125.
Warning: This card comes with a £25 annual charge.
If you fail to pay it off each month you’ll be hit with a 29.8 per cent APR.
As mentioned above, Amex is not accepted in all stores.
Verdict: If you’re not a big spender and are wary of paying any annual charge then Amex’s free cashback ‘everyday’ credit card might be best for you.
However, for those who expect to spend in excess of £10,000, the fee-paying option will ultimately prove more lucrative – particularly if you take full advantage of the introductory three month offer.
Best for frequent flyers
Your choice of rewards card will largely depend on which airlines you prefer to use, because a combination of credit card and frequent flyer points will yield the best discounts.
Credit Card: British Airways American Express Premium Plus Card
Perks: The major crowd pleaser on this card is a free companion ticket on one flight booked with your Avios points. Card holders are eligible for this if they spend more than £10,000 a year.
It means you can get two seats for the Avios points of one – although you still have to foot the bill for taxes, fees and charges on the ‘free’ seat.
Sky-high rewards: You can earn Avios points with your own air miles when flying with the likes of British Airways, Aer Lingus and Iberia, and boost them with the BA Amex card
The sign-up bonuses are good, too. At the moment you get 25,000 Avios points when you successfully apply and spend £3,000 within the first three months.
Cardholders can get automatic enrolment to the British Airways Executive Club, which includes priority on standby waiting lists, 24/7 support when traveling outside the UK through Global Assist, and travel accident insurance of up to £75,000 on public transport when booked with their Amex card.
Do you need to clear existing debt?
Before you think about signing up for a new card to use for spending, you should make sure that your existing debts are in order.
If you’ve racked up a load of debt and have decided to make a fresh start on tackling it, zero per cent balance transfer cards could be the way to go.
Moving your debt to an interest-free card means that you can freeze the size of your debt, rather than continually playing catch-up as interest piles up.
Make sure you stick to the rules and clear your debt within the time period, otherwise you could be hit with high interest rates.
The reason credit card firms offer interest-free periods is because they manage to catch so many people out.
You get 1.5 Avios points for each £1 you spend and you also get three Avios points for every £1 you spend with British Airways or BA holidays.
As a guideline, you will need around 9,000 points for a return flight from London to Berlin.
A total of 15,000 points gets you as far as Barcelona, and 20,000 buys you a return flight to Athens.
Warning: It’s worth bearing in mind the number of Avios required jumps around depending on peak and off peak dates, the airline you fly with and how much cash you want to put towards it.
More importantly however, this card comes with a hefty £250 annual fee.
Remember to pay it off each month or you will face an enormous 101 per cent APR.
Verdict: If you are a big spender and a frequent flyer, this card is one of the most lucrative deals on the market.
But if you don’t want to pay an annual fee, there is a free alternative in the British Airways American Express card.
The sign-up perk for this card is a 5,000 BA Avios point bonus, which you get after a £1,000 spend in the first six months.
For those who are frequent flyers on Virgin Atlantic it may be worth checking out the Virgin Atlantic Reward+ Credit Card.
Best for overseas spending
Credit card: Halifax Clarity credit card
Perks: This card has no extra charges for spending abroad, and does not charge for withdrawing cash anywhere in the world.
Plus it’s a Mastercard, which means conversion rates are much better, whilst Section 75 protection applies to overseas transactions too. This means the card provider protects purchases over £100 free of charge.
A specialist travel credit card won’t charge you extra for spending abroad
There is also no annual fee – so there are zero extra costs as long as you pay off your balance in full every month.
Warning: While there is no fee, interest is charged immediately at the card’s standard rate of 19.9 per cent on cash withdrawals and spending abroad. You can minimise the cost by repaying in full as soon as possible.
Depending on your credit score, applicants may be given a higher interest rate of 27.95 per cent when withdrawing cash. In either case, it’s crucial to pay this off to avoid being charged daily.
You will be charged £12 if you pay your balance late, have a payment returned or go over your limit.
Credit card: Barclaycard Rewards
Perks: There is no annual charge and no fees when using the card abroad, and you’ll be able to withdraw cash from an ATM without any charges.
The card comes with 0.25 per cent cashback on your everyday spending.
Dream holiday: A specialist travel credit card won’t charge you extra for spending abroad
You can also get up to five months of Apple Music, Apple TV+, Apple News+ and Apple Arcade for free, with your new Barclaycard – although this continues as a paid subscription after trial.
Warning: Remember to pay it off in full each month or you’ll be stung with a 22.9 AP.
It’s also a Visa credit card, so you won’t be able to use it on Amazon’s UK website from next year.
Best for Balance transfers
Perks: This card offers the longest interest-free period of any balance transfer credit cards – up to 31 months.
Warning: There is a 2.75 per cent charge when transferring debt your debt over.
Once the 31-month interest free period ends, the APR rises to 20.9 per cent.
Perks: Offers a 0 per cent interest on balance transfers for up to 30 months.
You can also collect 500 bonus Nectar points each time you spend £35 or more on Sainsbury’s shopping with your credit card, up to ten times in your first 2 months. That’s a total of 5,000 points.
One Nectar point is worth 0.5p, so this could potentially be worth £25.
There is also no annual fee for this card.
Warning: Sainsbury’s may offer you a 0 per cent interest period of 24 months depending on your individual circumstances.
A Balance Transfer fee of 1.5 per cent applies to transfers made at application. The charge will depend on your current offer thereafter
After the 0 per cent period the APR rises to 20.9 per cent.
Perks: Another card from Sainsbury’s, this one offers a 0 per cent balance transfer period of 21 months and there is no fee for transferring. There is not an annual fee, either.
Warning: Sainsbury’s may offer you a 0 per cent interest period of 17 or 13 months instead of 21, depending on your individual circumstances.
No balance transfer fee applies to transfers made within the first 3 months. The charge will depend on your current offer thereafter.
After the 0 per cent period the APR rises to 20.9 per cent.
Verdict: Santander’s card will be perfect for borrowers looking to pay off debts by transferring their entire debt over to a new card, with the promise of 0 per cent interest for a fixed period of time.
However, for those who don’t require such a long period of time it might be sensible to opt for Sainsbury’s 21 month balance transfer deal and avoid a charge on transfers.
Best rewards cards for supermarkets
Store card membership: Tesco Clubcard Plus
Perks: This card offers five points for every £4 spent in store, as well as giving you 10 per cent off your Tesco groceries twice a month.
You also get 10 per cent off on selected Tesco clothing and homeware brands including F&F, Fred & Flo, Go Cook, Tesco Pet, Carousel and Fox & Ivy.
M&S Club Rewards is exclusively available to M&S Credit Cardholders.
It’s also worth noting that Tesco Clubcard customers benefit from an array of discounted prices when grocery shopping.
With this card you can expect to see an annual reward benefit of £225 a year for every £300 spent monthly, according to number crunching by MoneyComms.
Warning: It comes with a £7.99 monthly fee which will eat into your annual gain.
Store card membership: M&S Club Rewards
Perks: This card from Marks & Spencer provides a host of benefits including unlimited next day delivery for M&S online purchases, additional reward points on M&S shopping and overseas spending, and a plethora of vouchers.
The annual benefits for an M&S credit card customer with Club Rewards membership can total up to £273 if you spend £300 in-store each month, according to MoneyComms.
What to watch out for: The £10 monthly charge will eat into your annual gain.
This is also exclusively available to M&S credit card holders.
Protecting your money
Another major bonus with rewards cards is the consumer protection you are entitled to, under Section 75 of the Consumer Credit Act 1974.
Put simply, if you use the credit card to buy something worth more than £100, here or abroad, the card issuer is equally liable if something goes wrong.
Best for Amazon shoppers
Credit card: Amazon Platinum Mastercard
Perks: This card from the online retail giant has no annual charge.
It offers £10 gift cards for every 1,000 points earned, as well as a £40 gift card up front.
To build up their points tally, Prime members get 3 points for every £2 spent on Amazon’s website, whilst non-Prime members get 1.5 points for every £2 spent.
This means an Amazon Prime customer using this card on the Amazon website will need to spend a total of £667 to receive a £10 gift card.
Whether you are a Prime member or not, you will also get half a point for every £2 worth of spending elsewhere.
Warning: This card charges no interest for the first three months after you open an account. After that, those who forget to pay it off in full each month will be stung with a 21.9 per cent rate.
Verdict: For those who regularly shop on Amazon this could be a great choice.
But equally, those who frequently shop at their local Tesco or M&S could stand to benefit via both their lucrative reward cards.
Best overall rewards card
Credit card: American Express Preferred Rewards Gold Credit Card
Perks: This credit card offers members 20,000 bonus points when they spend £3,000 in their first three months – which is enough for a £100 gift card from Amazon. For frequent flyers, it can also be converted into Avios points.
Credit cards offer a host of rewards – including points that can be used towards flights
You also earn one Membership Reward point for every £1 you spend, and two points for any airline or foreign currency purchase.
There is also the added benefit of getting £5 back twice every month by spending on Deliveroo.
Finally, you can take advantage of two complimentary lounge visits per year at over 1,200 airport lounges globally.
Warning: It comes with a £140 annual fee after the first year. However, if you cancel before your first year is up, you’ll essentially have enjoyed this card for free.
If you fail to pay your balance off each month, you’ll be hit with a whopping 59.9 per cent APR.
Verdict: If you make full use of the perks, then this card could be a highly lucrative option, even with the £140 fee.
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