Credit cards aren't just about spending. They are also powerful tools that, when used wisely, can help you save money, manage debt and even earn rewards. Whether you're looking to cut down on interest payments, earn cashback on everyday purchases, rack up air miles for your next holiday, or avoid fees while traveling abroad, there's a credit card tailored to your needs.
In this guide, we’ll break down the best options on the market for balance transfers, purchases, cashback, air miles and travel spending. We'll show you how to use these cards to your advantage, ensuring you get the most value while avoiding common mistakes.
Best 0% balance transfer credit cards
If you're struggling to keep up with credit card payments, a balance transfer credit card can be a lifesaver. These cards allow you to transfer existing credit card debt onto a new card with a 0% interest rate for a set period, potentially saving you hundreds of pounds in interest.
However, there are some crucial rules to follow to make the most of these deals:
Always pay the minimum monthly repayment. Missing a payment could result in losing your 0% interest deal, incurring fines, and damaging your credit score.
Clear the debt within the interest-free period. To avoid paying interest after the promotional period ends, make sure you can pay off the entire balance within the 0% timeframe.
Don’t use the card for new purchases. The 0% deal usually applies only to transferred balances. Using the card for new spending could lead to hefty interest charges.
Check your credit score. The best deals are often reserved for those with a strong credit rating, so it's worth checking your score before applying.
Chris Lilly, a credit card expert at personal finance comparison site finder.com, said: “After an expensive December, January can be a popular time for a financial reboot. So it's not surprising to see the big names in credit cards battling it out to win new customers with punchy 0% deals.
"The longest 0% balance transfer deal available has crept up to an impressive 31 months — offered by Barclaycard (BARC.L) (which is even giving £20 cashback when you make a transfer). HSBC (HSBA.L) and MBNA come close to this with 30-month deals. All three cards charge a one-off balance transfer fee but none of them charge charge annual fees. If 14 months at 0% would be long enough to clear your card debt, Barclaycard also offers a no-transfer-fee deal.”
Best 0% purchase credit cards
A 0% purchase card allows you to make new purchases without paying interest for a set number of months. This can save you thousands compared with using a standard credit card, assuming you pay off the balance during the interest-free period.
These cards are perfect for planned, necessary purchases. Think of them as a tool for managing big buys such as a new TV or essential home improvements.
Let’s say you take out a 0% purchase card with a 10-month interest-free period and spend £2,000 on new appliances. If you repay £200 each month, you’ll clear the debt before the interest kicks in. However, if you still have a balance after the 10-month period, you’ll start accruing interest at the standard rate, which can be as high as 27% annually.
Key points:
1. Make sure to pay at least the minimum each month to keep the 0% deal.
2. Borrow only what you can comfortably repay within the 0% period.
Lilly said: “Barclaycard and MBNA are leading the way with 22-month 0% deals, making these great options for spreading large expenses. If you opt for the Barclaycard and spend £500 in your first 90 days, you'll get £20 cashback.
"None of these cards come with annual fees, and all of them revert to very standard (read 'punishing') rates after the 0% periods end.”
Best cashback credit cards
A cashback credit card rewards you with a percentage of your spending, effectively giving you back some of what you spend. For example, if your card offers 1% cashback and you spend £100 on groceries, you'll earn £1 back. This cashback is typically credited to your account or added to your statement.
1. Limits: Some cards cap the total cashback you can earn.
2. Introductory offers: Cashback rates might only apply for the first few months.
3. Restrictions: Some cashback offers are limited to specific purchases or retailers.
4. Minimum spend: Some cards require you to spend a certain amount to qualify for cashback.
Lilly said: “Earning cashback on your everyday spending is a good way to make your money work a little bit harder for you. The American Express (AXP) Cashback Everyday Credit Card currently offers the highest introductory cashback rate, earning you 5% cashback on purchases (up to £125) for the first five months.
"After that, you can still earn 0.5% cashback on an ongoing basis, or 1% on annual spend of over £10,000. There’s no annual fee with this particular Amex card either.”
Best credit cards for air miles
If you travel frequently, a credit card for air miles can help reduce the cost of flights and even unlock perks like flight upgrades and hotel stays. By using these cards for everyday purchases, you can earn points that can be redeemed for flights with your favourite airline’s loyalty programme.
How it works:
1. Earn miles: Points are usually earned based on the amount you spend and the class of your ticket — premium tickets often earn more points.
2. Redeem points: You can use points to cover the cost of flights or upgrades, though taxes and fees may still apply.
Lilly said: “For big rewards, the British Airways (IAG.L) American Express Premium Plus Card offers 30,000 Avios when you spend £6,000 in three months, while the Barclaycard Avios Plus Card gives 25,000 Avios for spending £3,000 in the same period.
"Virgin Atlantic fans can earn 18,000 points with the Virgin Money Virgin Atlantic Reward Plus Credit Card by making their first purchase within 90 days.”
Best credit cards for holidays and travelling
Planning a trip abroad? A specialist travel credit card can save you a bundle by offering near-perfect exchange rates without the usual foreign transaction fees.
Most credit and debit cards charge around 3% on foreign transactions, meaning a £100 purchase abroad could cost you £103. On top of that, some cards add a flat fee for every overseas transaction.
Specialist travel cards waive those fees, letting you spend abroad at the same rates your bank gets.
1. Avoid cash withdrawals, as they often come with fees and interest.
2. Use the card for spending abroad to enjoy near-perfect exchange rates.
Lilly said: “The Barclaycard Rewards Credit Card and Virgin Money Everyday Cashback Credit Card don’t charge fees for making purchases overseas. Neither card has an annual fee and you could benefit from earning 0.25% cashback on your holiday spending too. Be sure to pay your card off in full each month to avoid paying interest.”
Whether you're looking to manage debt, earn rewards, or save on travel costs, choosing the right credit card can make a big difference to your finances. Be sure to compare offers and read the fine print to find the best card for your needs.
Disclaimer: The opinions expressed are the author's alone (unless stated otherwise) and have not been provided, approved, or otherwise endorsed by the providers listed. Yahoo does not earn any commissions from the lenders, or any other third party from the content in this series.
