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Need to stretch your budget? Time to consider our top-rated credit cards!

Need to stretch your budget? Time to consider our top-rated credit cards!
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The Covid-19 pandemic put a halt to many everyday things, including borrowing money. As a result, many savvy earners saw the pandemic as an opportunity to build their savings and take a break from their credit cards. 

However, recent findings by Hargreaves Lansdown suggest that this savvy behaviour is coming to an end. In the New Year, a rising number of people are expected to borrow money in order to stretch their budget amid the current spending squeeze.

If you feel tempted to boost your budget by borrowing cash, here’s what to watch out for and which credit cards you should turn to for the best offers.

Borrowers should be wary of rising interest rates!

Recent research by Hargreaves Lansdown has revealed the first positive spike in borrowing since the start of the pandemic. According to the findings, consumer borrowing is up 0.4% in a year – excluding mortgages. Furthermore, credit card borrowing is down by just 0.2% and other types of loans are up 0.6% compared to last year’s figures. This recent surge in borrowing has increased the average cost of a new loan to 6.43% from a previous low of 4.41%, which was recorded back in June.

The recent increase in borrowing is largely due to the current price squeeze that is affecting people across the UK. The cost of Christmas along with rising inflation rates and the end of lockdown has meant that many people are struggling to stick to their budgets.

However, Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, has warned that the rise in borrowing may be poorly timed. According to the expert, our thirst for borrowing money is happening just as bank interest rates are starting to rise.

Consequently, Brits may face higher payments on any money that they borrow over the next few months. This could create an even trickier financial state for many people across the UK. Moreover, savings rates have fallen well below the monthly average to just £4.5 billion per month. This suggests that spenders have less to fall back on if they are hit by harsh interest rate increases.

These credit cards could help you to borrow wisely

In an ideal world, you would stop borrowing money completely. However, as the cost of living continues an upward trend, this option may not be realistic for everyone.

Instead, here are four top-rated credit cards that could help you to make wiser borrowing decisions in 2022.

1. Santander All In One Credit Card

The Santander All In One Credit Card comes with a range of perks that could considerably cut your interest rates. The card comes with a 20-month 0% interest period on new purchases and a 26-month 0% balance transfer period. The annual fee for the card is a reasonable £36. This makes it an excellent choice for those on a tight budget.

2. M&S Transfer Plus Credit Card

The M&S Transfer Plus Credit Card comes with no joining fee as well as a 3-month 0% interest period on new purchases. Furthermore, the card will give you 36 months in which you do not have to pay any interest for balance transfers.

3. The Natwest Credit Card

If you frequently spend money abroad, the Natwest Credit Card could be the best option for you. The card offers a 0% foreign transaction fee and charges no annual fee! The card received a 5-star rating from Moneyfacts in 2021.

4. John Lewis Partnership Credit Card

This John Lewis Partnership Credit Card is excellent for keen shoppers who need a little budget boost. The card comes with a nine-month 0% interest period on new purchases. Cardholders are also gifted 0% interest on balance transfers for 18 months. You could also receive five reward points for every £4 that you spend in John Lewis stores.

To learn more about which credit card is the best option for you, check out our comprehensive credit card guide to assess your options.

Paying credit card interest? Time to switch to a 0% balance transfer card.

If you can’t afford to clear your credit card balance at the moment and are paying monthly interest, then check to see if you can shift that debt to a new credit card with a long 0% interest free balance transfer period. It could save you money.

By transferring the balance of any existing card (or cards) to a new 0% card, you could be debt-free more quickly – since your repayments will go entirely towards clearing the balance of the debt you owe, and not on interest charges.

Discover our top-rated picks for 0% balance transfer credit cards here and check your eligibility before you apply in just a few minutes – it’s free and won’t affect your credit score.

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