Credit cards you should hang on to

( and why your old one could be a dud )

MANY of us are guilty of sticking with a bogstandard credit card issued by our bank. But if you play your cards right, the best credit deals could actually make you money.

Today, is part four of our Money Mail Spring Clean Your Finances series.

On Saturday, we revealed how to save thousands of pounds by switching your bills; on Monday, we covered protecting against mortgage rate hikes and yesterday focused on turbo-charging investments.

Now it’s time to you revamp your credit cards. If you are able to clear the full balance every month, you can cash in on rewards points and money-back schemes.

And if you’re paying high interest, then switching to a interest-free deal could save you hundreds of pounds a year.

Before you apply for a new credit card, use an ‘eligibility checker’ on websites such as MoneySavingExpert or USwitch to find out if you are likely to be accepted.

This will prevent you damaging your credit score with any failed applications.

REWARDS FOR YOUR LOYALTY

RETAIlERS including John lewis, M&S, Tesco, Asda and Sainsbury’s all offer rewards credit cards.

These give you points that can be spent in-store, or traded for vouchers to spend in restaurants, hotels and attractions.

Points systems are often complex, making it difficult to compare which cards offer the best value for money.

A good place to start is to pick one linked to a shop where you spend the most. The M&S Bank Reward Plus card has a decent introductory offer of up to £25 on your first spend in-store in the first three months. After that, you need to spend £250 in M&S during your first year to earn £5. When spending outside the store, you would have to spend £2,500 to earn that £5.

If you don’t want to be tied to one retailer, the American Express Rewards Card offers a £50 voucher for stores such as Boots and Amazon if you spend £1,000 within three months. After that, you receive 1 point for every £1 spent. The value of that point depends how you redeem it — a £5,000 spend would earn you £25 of M&S vouchers, for example. The annual percentage rage (APR) on reward cards can be as high as 56.5 pc, so set up a direct debit to clear the full balance each month.

CASH BACK IF YOU SPEND

CASHBACk cards pay a percentage of what you spend, usually annually, into your bank account. One of the most generous is the American Express Platinum Cashback Everyday (22.9 pc APR).

It offers 5 pc cashback worth £100 if you spend £2,000 in the first three months. You then get 0.5pc on up to £5,000, rising to 1 pc on anything above that. But if you spend less than £3,000 a year on this card, you’ll forfeit any cashback. Tandem Bank, a new challenger bank, offers a Mastercard with 0.5 pc cashback (18.9 pc APR). There are no transaction fees for overseas purchases either, making it a good holiday card.

For £3 a month, Santander also offers 0.5pc cashback, as well as no fees on foreign spending and 30 months interest-free on purchases and balance transfers.

FEE-FREE TRAVEL CARD

HOlIdAYMAkERS are hit with rip-off fees of around 3pc if they use their card abroad. It means they have to pay an extra £7.50 for every £250 spent, according to financial service Moneyfacts.

However, the Barclaycard Platinum Travel Card has no transaction fees on spending abroad for the next four years.

Unusually, it also doesn’t charge interest on overseas cash machine withdrawals — just as long as you pay your statement in full each month.

After August 2022, transaction fees and interest on spending and withdrawals will apply. The card also charges 0 pc interest on purchases for 12 months.

Santander and Halifax also offer decent specialist travel cards with no transaction fees on purchases or cash withdrawals.

NO INTEREST ON SHOPPING

CREdIT cards can be a cheap way to spread out the cost of big purchases.

look for a card with a long 0 pc period and then set up a repayment plan to ensure you clear the full balance before it ends and you have to start paying interest.

Sainsbury’s Bank Purchase Mastercard (18.9pc APR) offers 31 months interest-free on spending, plus £2.50 worth of Nectar points every time you spend over £20 in-store in the first two months — with a maximum bonus of £25.

Halifax also offers up to 30 months interest-free.

CLEAR DEBTS FOR LESS

IF YOU’RE paying interest on credit card debts, switch to a 0pc interest balance transfer card. MBNA offers a balance transfer card with an interest-free period of up to 36 months after which it’s 19.9 pc APR. There’s a 2.49pc fee to move over your balance — so £62.25 on a typical £2,500 debt. Sainsbury’s Bank offers an interest-free period of 28 months and has no transfer fee.

Once you’ve moved your debt, set up a payment plan to clear the full balance before the offer period ends. Helen Saxon, of MoneySavingExpert, says: ‘Switching to a 0 pc balance transfer card means you can focus on repaying debt rather than paying off interest.

‘The general rule of thumb is to choose the lowest fee in the time you’re certain you can repay.’

You can get cards with an interest-free period for both new purchases and balance transfers, but you tend to pay a higher transfer fee in return.

If you have a less-than-perfect credit rating, you may not be eligible for a 0pc interest card, so consider a low APR card.

lloyds Bank has a Mastercard with the lowest interest rate on the market at 5.7 pc APR on spending and balance transfers.

But again, it may offer some borrowers a much higher rate of 14.9 pc.