Cash in on Black Friday – by using free credit
Love it or loathe it, Black Friday weekend is looming. This is when retailers are expected to shower shoppers with juicy discounts for a few days only.
If your savings won’t stretch to it but you don’t want to miss out on a bargain over the period – Black Friday, November 29 to Cyber Monday, December 2 – you may want to make your purchases on a cheap credit card.
Research suggests that, on average, people spend about £230 during the frenzy with most bagging an electrical bargain such as a washing machine or television. The cheapest way to spread the cost of the splurge is by using a zero per cent credit card. These cards allow you to spend on your card without interest being applied – in some cases for more than two years.
Black Friday is the biggest shopping event of the year with millions shopping in the sales
Lengthy as these periods are, they are less generous than those on offer a year ago.
According to market research group Moneyfacts, the best deal – from MBNA – currently provides an interest-free period of up to 26 months on card purchases.
But this is three months less than the best deal available this time last year. The key to using these cards wisely is to ensure the debt is paid off by the final month of the interest-free period – otherwise borrowers end up on an expensive ‘go-to’ rate, which is normally 20 per cent or more.
Rachel Springall, of financial products scrutineer Moneyfacts, says: ‘It is important to work out a realistic repayment plan whatever card you use, so that you don’t regret the purchase later down the line.’
Credit cards of all kinds are useful for spreading the cost of debt but it is wise to make more than the minimum repayment in order to clear the debt faster and avoid unnecessary interest.
To pay back £3,000 over 26 months, shoppers would need to repay around £116 per month. Springall says: ‘If a borrower made the purchase on a standard card charging 20.9 per cent APR and repaid just £100 per month, the debt will linger for more than three years and it would cost them £1,114 in interest.’
Credit cards also offer vital shopper protection. If you buy something in person, online or over the phone costing from £100 to £30,000 and the retailer goes bust or the item never arrives, you can claim your money back from the credit card provider under Section 75 of the Consumer Credit Act.
This also entitles you to refunds if there is a problem with the item received. Even if you only pay a deposit with a credit card you will be protected for the full amount.
Among the best zero per cent deals are MBNA’s (26 months); Barclaycard Platinum and Sainsbury’s (both 25 months); Tesco Bank Clubcard and Bank of Ireland (24 months).