The John Lewis Christmas TV ad is up and London’s Oxford Street lights are on, officially marking the start of the festive madness.
While we are not ones to jump on the Christmas bandwagon too early at This is Money, if there is one thing you should think about in advance, it’s how you are going to pay for all of the extra spending this year.
For many households, the answer will be with a credit card to help spread the cost while others will use the period of high spending to earn a tidy sum in cashback or rewards.
With this in mind we have put together a list of the best cards to use this Christmas – and when you need to apply by.
Feeling festive? Christmas lights are up on Oxford street already
Most rewards cards come with introductory bonuses handed to you if you spend a certain amount, such as a bundle of airmiles or a boosted cashback rate.
Just before Christmas is therefore a great time to sign up as the expensive time of year will help you reach these minimum spending thresholds.
For those aiming to make the festive period more affordable, a 0 per cent interest credit card is the best option – allowing you to spread the cost over several months without your debt inflated further by interest.
Best for spending
Joint first – Sainsbury’s Bank
The Sainsbury’s Bank Dual Offer Credit Card comes with 29 months 0 per cent interest on spending (and balance transfers).
That’s just over two years to clear purchases before you’re charged interest. Standard interest is set at 19.95 APR per cent so again, do make sure you clear it in time. It also comes with reward points on spending.
A current promotion is offering 750 bonus points each time you spend £35 or more on Sainsbury’s shopping in your first two months – up to 7,500 Nectar points, worth £37.50.
You also get two Nectar points for every £1 you spend on Sainsbury’s shopping and fuel plus one point per £5 spent elsewhere.
Nectar credit cards are not the most generous of supermarket rewards schemes – each point is worth 0.5p – but it’s a nice little bonus if you do shop at the supermarket frequently.
Time to arrive: Seven to 10 days after successful application.
Joint first – Tesco Bank
Just behind Sainsbury’s is Tesco Bank’s 28-month Purchase Credit Card.
While a slightly shorter deal, Tesco’s Clubcard scheme is a little more generous, and certainly a better pick if you are likely to shop in its stores.
You get five Clubcard points in total for every £4 you spend on the card in Tesco stores or on petrol and one point for every £8 spent elsewhere.
One point is worth 1p if spent in store at Tesco and 3p if redeemed using Tesco’s Clubcard rewards vouchers.
Again you will need to keep on top of your repayments as interest jumps to 19.9 per cent once the purchase deal ends.
Time to arrive: You’ll receive your card within five to seven days after your application is accepted.
Runner up – There are a whole host of purchase deals out there. We have picked some more of the top deals in out complete guide to credit cards for spending.
It must be Christmas? Sir Elton John features in the John Lewis advert this year
How to spread the cost of Christmas wisely
Think carefully before you apply – The best deals on the market, including those in this roundup are naturally going to be the most popular.
This means the providers have the pick of the bunch when it comes to who they will accept and those without a spotless credit history may miss out.
In reality only 51 per cent of successful applicants need to be offered the advertised deals, so even if you make it past the first hurdle, you could be given an offer with a shorter 0 per cent promotion or higher interest rate.
Set up a direct debit before you spend – First off, even credit cards with 0 per cent promotions attached require monthly minimum deposits.
Remember to clear the whole balance before standard interest kicks in, you will need to pay more than the minimum when possible.
The best way to do this is to leave the card at home, look at the amount owed and calculate how much you need to repay each month to clear it. Then set up a direct debit for that amount.
Be wary of rewards and cashback – while we have included this type of card in our roundup, you should only consider these if you know you will handle your debt sensibly.
Tempting rewards are designed to get you to spend more as the higher your spending, the more card companies will potentially earn in interest.
Can you clear the balance each month? You could consider a top cashback or rewards card.
This is not an exhaustive list – for this, check our guide to the best rewards cards for big spenders.
To make the most of these cards, you should aim to put as much of your spending on them. They also come with slightly higher than average interest so you MUST repay each month, or they are not worth having at all.
First place – American Express
The American Express Platinum Cashback Credit Card costs £25 per year, but for that you can earn up to 5 per cent in the first three months (up to £125) – perfectly timed for Christmas.
After that you earn 1 per cent up to £10,000 and up to 1.25 per cent after that.
As with most rewards card it comes with a higher than average interest rate on spends at 22.9 per cent (28.2 APR per cent) so make sure you clear the balance each month.
When we crunched the numbers a £1,000 monthly spend earns £195 in the first year after fees, and £100 every year after that.
Anyone likely to spend under £9,000 per year on the card would be better off with the fee-free version – the Platinum Everyday Credit Card.
Time to arrive: Takes up to 10 days from application to arrive.
Runner up – Tandem
App-only bank Tandem offers 0.5 per cent cashback on all spends on its cashback credit card. It carries no annual fees and charges 18.9 APR per cent interest.
The card also benefits from no overseas spending or withdrawal fees.
Festive spending: Christmas is typically the most expensive time of year for households
Virgin Atlantic: The revamped credit card sign up bonus offers 10,000 Flying Club Miles
Best for rewards
Our current top pick for airline rewards is from Virgin Atlantic, thanks to a boosted sign-up offer.
But if you are a loyal British Airways passenger instead you can consider the BA American Express Premium Plus or BA American Express Credit Card.
First place – Virgin Atlantic
Virgin Money has just upped the sign-up bonus on its free Virgin Atlantic Rewards card.
It offers 5,000 Flying Club Miles after your first purchase within three months. If you spend £1,000 within that time, it will hand over an extra 5,000 miles.
Over the festive period reaching this limit is likely to be fairly easy for most families once you factor in food costs, presents and Christmas gatherings with family and friends.
If you spend £20,000 you get a free companion ticket or premium upgrade – this is pretty high, but it could be feasible if you use the card for home improvements or big ticket items.
You get 0.75 points per £1 spent on the card, or 1.25 per £1 spent on Virgin holidays or Virgin Atlantic flights.
The card comes with an APR of 22.9 per cent so make sure to clear the balance each month to avoid interest.
A better option for big spenders is the The Virgin Atlantic Rewards+ .
It comes with an annual fee of £160, but you get up to 25,000 miles thanks to its boosted new customer offer.
This requires a £1,500 spend within the first three months, again, possible over Christmas.
It’s easier to get the companion voucher with this one, needing a smaller £10,000 spent. Swiping your card gets you 1.5 miles per £1 and interest is set at 22.9 per cent on top of the monthly fee.
While the card is expensive, if you qualify for the bonus points and the companion voucher you will likely be quids in by a few hundred pounds for flights for a couple.
Time to arrive: Both cards arrive within seven to 10 working days if you are approved.
Runner up: John Lewis
Our runner up prize goes to John Lewis’ Partnership credit card. While it doesn’t offer the most lucrative deal there are many people out there who like to shop at Waitrose and John Lewis. If you fall into this camp it could be worth applying for the Partnership credit card.
It’s currently offering £30 in John Lewis vouchers when you spend £250 within 90 days plus you earn 1 point per £1 spent in stores and per £5 elsewhere. It carries an APR of 18.9 per cent.
An honourable mention also goes to the M&S Reward Plus Credit Card. It only offers six months 0 per cent on purchases (19.9 APR per cent after) but it comes with a 2,000 M&S point bonus and double points on all M&S shopping for the first 12 months.
Top deals for clearing Christmas debts
If you don’t get round to applying for a new credit card before Christmas, a balance transfer credit card is a useful tool to help spread the cost of clearing any debt build up on an existing credit card.
First Place – Barclaycard
Our top pick is the Barclaycard 31-month balance transfer Platinum credit card deal, offering the longest 0 per cent transfer deal on the market and with a relatively low 1.45 per cent handling fee.
To get the deal you must shift the debt over within the first 60 days. You will pay a 3 per cent handling fee initially but Barclaycard then refunds you 2.05 per cent.
The card comes with six months 0 per cent on purchases. After the 0 per cent terms end, interest is charged at 19.9 per cent so make sure you have cleared the balance before then.
Time to arrive: The card takes seven to 14 days to arrive if you are successful.
Runner up – Sainsbury’s Bank
Sainsbury’s Bank’s balance transfer credit card offers 30 months 0 per cent interest if you transfer a balance to the card within the first three months.
It’s slightly shorter than the Barclaycard deal, and it comes with a slightly higher fee but it’s second in the best buy tables.
You pay 3 per cent in handling fees for a balance transfer initially, but receive a refund of 1.5 per cent.
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