Inflation has reached its highest point for more than a decade, meaning you need to find ever more innovative ways to save money.
Credit cards might seem like the last place you’d look to achieve this, but they can save you a packet – provided you use them carefully.
Rewards credit cards are becoming increasingly popular these days, and while most are gimmicky, there are a few genuinely good deals on the market.
The golden rule with rewards cards is that they are strictly for people who are able to clear their credit card debt entirely every month. Fail to do this and the sky-high interest rates on these cards will quickly surpass any savings you make.
Save 5% on your monthly outlays
The American Express Platinum Cash Back card repays an impressive 5% on expenditure during the first three months (limited to £4,000), falling to 1% thereafter.
Obviously there’s little point in using the card to buy things you don’t really need – a 5% saving means little if you spent 100% too much – so use this card is for your regular monthly expenditure.
Your bank probably wouldn’t let you get away with paying your mortgage via credit card for a few months, so use your card on groceries, clothes for the kids, etc instead then pay it off in full.
Assuming you spend £1,000 a month on this card, you would have saved £150 by the time the 5% rate expires.
Monthly saving £50
Save 3% on your fuel
If you own a car, you may or may not have noticed a subtle rise in the cost of filling your tank recently.
At the time of writing, diesel cost an astonishing 131.56p a litre and petrol 118.16p (up from “just” £1 last November). No doubt you have already curtailed your driving as much as possible, but with the soaring prices showing no sign of abating, you need to cut costs further.
The CitiBank Shell Cash Back card repays 3% of all petrol purchases at Shell stations. Assuming you spend £120 a month on fuel, the card will save you £43 over the course of a year. Not a massive sum, but these things all add up, plus you get up to £50,000 motor legal protection and free travel accident insurance free when you sign up for the card.
Monthly saving: £3.60
Save 17% on new purchases
Life can throw up a lot of (unpleasant) financial surprises. Whether it’s your boiler self destructing two days after the warranty expires or urgent repairs on your car, you often find yourself with an unexpected bill and no funds to pay it.
The problem with standard credit cards is that they come with astronomical APRs these days (the average is over 17%), so it’s essential you choose a card with a lengthy 0% offer on new purchases instead.
Without doubt the best card on the market at the moment is Capital One’s Platinum credit card, which offers 14 months interest free on new spend (excluding cash withdrawals, of course).
Unfortunately, Capital One is very picky about who it’ll offer this card to, so you’ll need an excellent credit rating to qualify (read more about the requirements here). If you don’t quite make the grade, opt for the HSBC credit card instead, which offers 12 months interest free.
Assuming your new purchase costs £2,000 and you pay it off in a year, you will save £190 in interest repayments.
Average monthly saving: £15.70
Save 17% on existing debt
As we mentioned before, credit cards charge a phenomenally high rate of interest, so it’s essential you switch any existing credit card debt to a 0% balance transfer card as soon as possible.
The Virgin credit card is still the best on the market, offering 15 months interest free with a 2.98% admin fee. Assuming you transferred £2,000 debt to this card and paid it off over 15 months, you would save £234 in interest.
However, if you only have a small debt that you are sure you can clear in just a few months, it will actually be cheaper to go for the Abbey Zero credit card. This only offers six months interest free, but charges you no admin fee whatsoever.
Average monthly saving: £19.50
