Best low-interest credit cards for Christmas shopping

By Emma Lunn

Paying off your credit card balance in full at the end of the month is easier said than done during the Christmas shopping season. If you think you'll be carrying a balance into the new year, you can minimize the inevitable interest charges with a low-interest credit card.

Because credit card applications can take weeks to process, the time to apply for a card for Christmas shopping is now. Here's how to find the right card to minimize your post-festive-season debt.

Cards with no-interest periods
If you play your cards right, you can spread out your Christmas debt without getting stuck with interest charges at all. Sarah Pennells, author, journalist and founder of SavvyWoman.co.uk, suggests going after a card with a 0% introductory period. low-interest-card

 "If you're Christmas shopping and know you won't be able to pay off your credit card in full in January ... a 0 per cent interest deal on purchases is ideal," Pennells says. "It means that, as long as you pay off the cost of any purchases you've made within the time limit of the 0 per cent deal, you won't have to pay a penny in interest."

There are a number of 0% interest credit cards on the market at the moment with introductory deals of up to 16 months. Those who pay off their debt within this timescale won't pay any interest at all.

However, borrowers should also look at the card's regular annual percentage rate (APR), as this is the rate they will be paying on any remaining debt once the introductory deal has expired.

If your introductory period expires, and you still have debt, you can try this trick to delay paying interest: Look for a card that has a 0% introductory period on balance transfers and transfer your outstanding balance to it. Some cards on the market don't charge interest on balance transfers for up to 22 months, but most typically charge a balance transfer fee -- so do the math first to see if the transfer makes economical sense. Keep in mind, however, that if you spend on a balance transfer card, you will pay interest on new purchases.

Low-interest cards
If you can't qualify for a card with a no-interest introductory period, you may be able to get a low-interest rate card. This type of card doesn't have an introductory offer but instead offers a lower-than-average rate for the long-term, meaning there's no need to shop around for a new card when an introductory deal expires.

Plus, you'll still get an interest-free grace period on each new purchase.

"If you do normally clear your balance in full, check the interest-free period, which can be anything up to 56 days," Pennells says.

Best card options for Christmas
With these guidelines in mind, it's time to shop for a card. Here are some options from the no- and low-interest spectrum. All these cards have no annual fee. Keep in mind that, given the advantageous terms these cards offer, you will likely need to have good to excellent credit to qualify.

Tesco Bank Clubcard credit card: This card is a good choice for those who already shop at Tesco -- or for anyone looking for a long interest-free period.

This card offers 0% interest on purchases for the first 16 months and then reverts to an APR of 16.9%. Cardholders also earn extra Tesco Clubcard points for spending on the card.

Marks & Spencer Bank MasterCard: This card offers 0% on purchases for 15 months before reverting to an APR of 15.9%. Cardholders earn 1 point for every £1 spent at M&S and 1 point for every £2 spent elsewhere. Points can be redeemed for vouchers to be spent at Marks & Spencer.

Sainsbury's Bank Low Rate credit card: This card has a low standard rate of 6.9%, one of the lowest standard interest rates on the market. It also offers 56 days interest free on each purchase. However, unlike other Sainsbury's Bank cards, you can't earn Nectar rewards points with this card.

Barclaycard Platinum Simplicity Visa: This card charges a low standard rate of 7.9% and offers 56 days interest free on each purchase. The low rate also applies to balance transfers, and the card charges no balance transfer fees.

Lloyds TSB Advance:  This card combines the best of both the low-interest and no-interest worlds. It sports a relatively low representative interest rate of 11.9% as well as a modest interest-free introductory period of six months. Keep in mind that, if you don't qualify for the lowest rate, you could be assigned a higher APR of up to 19.95%.

See related: The 5 biggest balance transfer mistakes, Brits willing to stretch budgets for Christmas

Published: 19 November 2012