Select plastic that’s fantastic for you and take the credit

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With sales tills ringing more than ever this time of year, card providers are offering increasing incentives to use their brand of plastic money.

The vast majority are issued fee-free. The few credit card exceptions are American Express (£75 for Preferred Guest and £25 for Platinum Cashback), Co-op (£24 on Platinum Tracker), Coutts (£90 on Gold MasterCard but refunded once thresholds reached), Lloyds TSB (£50 on Premia), Sainsbury’s (£60 on Gold Mastercard) and Santander (£24 for Cashback).

When selecting the best plastic for you, apart from fee, particularly consider:

n interest rate on both purchases and cash withdrawals if you do not always pay off monthly;

n credit period and how it is charged;

n minimum monthly repayment;

n cost of using abroad;

n benefits.

Charge cards have to be repaid monthly but can offer a good range of benefits. There are just three providers: American Express, First Trust Bank (part of AIB Group) and the Royal Bank of Scotland (both Adam and Coutts). Amex was founded in New York in 1850 by William Fargo, Henry Wells (both of whom started the Wells Fargo Bank) and John Butterfield. They first issued cards in the UK in 1963 although they have had offices here since the Second World War. With almost 96 million cards worldwide, their top markets are US, UK, Australia, Canada and Mexico.

The Amex Preferred Rewards Gold, which costs £93pa, currently offers 20,000 membership points by spending £1,000 in the first three months, enough for two complimentary return flights to a European city. Other benefits include free independent financial advice and insurance for lost or delayed luggage as well as flight delays and cancellation.

Amex also has its Platinum card at £300 annually with travel accident cover up to £250,000, worldwide multi-trip travel insurance, medical cover and other benefits.

Adam are fee-free with Classic Visa and Gold Visa but maximum monthly limits of £2,000 and £5,000. Coutts have World MasterCard for £350pa with free card protection plus all the benefits of Amex’s Platinum.

If looking for a no interest charge on transferring a balance, two providers offer a credit period up to 22 months – Barclaycard and Halifax, with the latter accepting transfers up to £3,000.

Interest rates on a standard (non-introductory) APR basis for purchases vary from 7.9 per cent (Barclaycard Platinum Simplicity Visa) and 8.4 per cent (Co-op Platinum Tracker Visa) to 39.9 per cent (Vanquis Visa), according to Moneyfacts.

For cash withdrawals, most providers charge considerably more although the Co-op’s Platinum Tracker Visa is exceptionally low at 4.594 per cent whilst the highest is 49.94 per cent (Vanquis Visa), both on an APR basis.

To ensure no interest charge for late payment, set up a direct debit facility. Otherwise the best free credit length is 60 days with Metro Bank for its MasterCard. The shortest period is 45 days with Capital One’s World MasterCard.

One of the ways that providers can rack up substantial charges is when a credit card is used abroad. Whilst the exchange rate will usually be better than bureaux de change here, a foreign usage loading is applied by most card issuers. This can be up to 2.99 per cent to which £3 or three per cent is added if it is a cash withdrawal. The latter fee is applied each time and therefore do not take out several small sums.

If going abroad, take one of the credit cards with no such foreign loading: Halifax (Clarity and Reward Clarity), Metro Bank, Post Office, Saga, Sainsbury’s (Gold). Watch, too, the daily cash limit which is not advised and therefore a reason for holding at least two cards.

Gerald Burton, a retired independent financial adviser who lives in Barnsley, chose Saga Platinum as it has no foreign usage charge. Together with his wife, Margaret, the couple spend much of each year travelling through Europe in their motorhome. They spend around £600 monthly on credit cards and opted for Saga because their Lloyds TSB one was “expensive abroad” with a 2.95 per cent charge on all purchases.

The Saga card is provided by Visa, which can trace its origins to a credit card issued by Bank of America in 1958. The initial card offered a US$300 credit limit and assumed the name Visa in 1976. Visa Europe started seven years ago and today has a membership of over 4,000 banks.

Cashbacks remain probably the greatest benefit. Barclaycard, which was founded by Barclays in June 1966, recently caused a storm of protest. It offered a generous cashback on a new card but then withdrew the offer without informing successful applicants that they would not receive the expected bonus.

The UK’s largest credit card provider offered a new Platinum card with an 11 per cent cashback on seasonal purchases with up to £100 returned. Although the rebate offer has been closed, Barclaycard has said it will honour those who applied.

Santander UK launched a new cashback card in September, the 123 MasterCard. With a £24 annual fee, it gives one per cent back on purchases at supermarkets, two per cent at department stores and three per cent on petrol, which overall could earn £228pa.

American Express has been offering cashbacks for 13 years. Their Platinum card gives the most, returning at least 1.25 per cent on everything without limit. Costing £25pa, it rewards loyalty by paying a double cashback in the anniversary month.

Some users like to have a card which will benefit a charity. David Sutcliffe, a 55-year-old electrical retailer in Doncaster, chose the Co-op Bank’s ‘Think’ card four years ago. His choice of card has meant the provider has donated a sum to saving the rainforest and David was sent a certificate advising that he now is the owner of a small piece of such land. The sum due is paid off monthly in branch.

One of the alternatives to cashback is a rewards programme. M&S Money give one point for each pound spent in their store and £2 elsewhere. Every quarter each 100 points earned is converted into £1 M&S voucher.

Finally, one of the key unsung reasons to place as much expenditure as possible on a credit card, not a debit card, is the support available under the Consumer Credit Act. Its section 75 makes providers jointly and severally liable with suppliers for misrepresentation or breach of contract, such as the non-supply of goods.