How to Make Your Credit Cards Pay
Executive Summary By James Daley

Britain’s credit-card market is one of the most competitive in the world. Most cards have no annual fees, offer attractive interest-free introductory periods, and come with generous loyalty schemes.

If you use your credit cards wisely, there’s nothing to stop you taking advantage of all the benefits while never paying the provider a penny in interest.

Interest-free deals

Although most cards usually charge a fee of about 3 percent when you transfer a balance from another card, Ulster Bank offers a six-month interest-free balance transfer deal with no charge at all, while Barclaycard Platinum offers a nine-month deal with a lower fee of just 1.7 percent.

If you have debt on one or more cards, balance transfers offer a great way to get yourself back on track. If you don’t yet have any credit-card debt and are thinking about making a big purchase, there are cards available that won’t charge you any interest on purchases for the first few months. First Direct’s Gold Card offers 0 percent on purchases for a full year – although you have to be a First Direct current account customer to qualify.

Credit Cards Payment

Taking advantage of loyalty schemes

Not all credit cards have great loyalty schemes, but there are a few good-value ones out there that can make you money if you use them wisely. Some, such as the American Express Platinum Cashback card, for example, pay you back a small percentage of every purchase you make.

In the case of the Amex card, you’ll get 5 percent on all purchases for the first three months, and then up to 1.5 percent thereafter, depending on how much you spend each year. Citi also has a generous cashback deal, paying you 3 percent when you buy petrol at a Shell station, and 1 percent on all other purchases.

Other cards offer useful rewards such as air miles. The Lloyds TSB Duo card, for example, pays you one airmile for every £10 you spend.

Here’s how it’s done

Do all your spending on the credit card each month, and put your salary into an instant access savings account to earn a bit of interest. Then, pay off the full balance on your card each month – but not until the last minute, so that you can maximise the interest on your salary. This will earn you a few extra pounds in interest and give you air miles, cashback or other rewards for simply doing spending that you were planning on doing anyway. And, as long as you always pay your balance in full and on time each month, it won’t cost you a penny.

If you’re disciplined, cashback and other reward schemes can, in effect, be a one-way bet.

Another related article: Credit Card Apply