Pedro Goncalves · Finance Reporter, Yahoo Finance UK Updated Wed 21 January 2026 at 6:16 pm GMT+8 7 min read

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Credit cards aren't just about spending. They are also powerful tools that, when used wisely, can help you save money, manage debt and even earn rewards.

Whether you're looking to cut down on interest payments, earn cashback on everyday purchases, rack up air miles for your next holiday, or avoid fees while traveling abroad, there's a credit card tailored to your needs. In this guide, we’ll break down the best options on the market for balance transfers, purchases, cashback, air miles and travel spending. We'll show you how to use these cards to your advantage, ensuring you get the most value while avoiding common mistakes.

A cashback credit card rewards you with a percentage of your spending, effectively giving you back some of what you spend. For example, if your card offers 1% cashback and you spend £100 on groceries, you'll earn £1 back. This cashback is typically credited to your account or added to your statement.

Things to watch out for:

1. Limits: Some cards cap the total cashback you can earn.

2. Introductory offers: Cashback rates might only apply for the first few months.

3. Restrictions: Some cashback offers are limited to specific purchases or retailers.

4. Minimum spend: Some cards require you to spend a certain amount to qualify for cashback.

Kate Steere, a credit card expert at personal finance comparison site finder.com, said: “If you’re after a cashback card that offers a decent initial cashback rate (1% for 12 months) and no monthly fee, then it’s worth checking out the Lloyds (LLOY.L) Ultra Credit Card.

"But if you want to maximise your cashback earnings, then Amex (AXP) currently offers the highest introductory cashback rate: 5% (up to £125). Just note that it’s only for the first 5 months, after which you’ll only earn 0.5% on your first £10,000 per year.”

A 0% purchase card allows you to make new purchases without paying interest for a set number of months. This can save you thousands compared with using a standard credit card, assuming you pay off the balance during the interest-free period.

Read more: First-time buyers in London need twice the UK average deposit

These cards are perfect for planned, necessary purchases. Think of them as a tool for managing big buys such as a new TV or essential home improvements.

Let’s say you take out a 0% purchase card with a 10-month interest-free period and spend £2,000 on new appliances. If you repay £200 each month, you’ll clear the debt before the interest kicks in.

However, if you still have a balance after the 10-month period, you’ll start accruing interest at the standard rate, which can be as high as 27% annually.

1. Make sure to pay at least the minimum each month to keep the 0% deal.

2. Borrow only what you can comfortably repay within the 0% period.

Steere said: “We now have three top providers (M&S [MKS.L], Lloyds Bank and TSB) offering 0% on purchases for up to 25 months, giving you just over two years to pay off your purchases and avoid any costly interest charges.

"These cards give you a long runway to pay off large purchases, such as a new sofa or your 2026 holiday. Just make sure you clear the balance before the end of the 0% period, or what looked like a smart move could cost you dearly.”

If you're struggling to keep up with credit card payments, a balance transfer credit card can be a lifesaver. These cards allow you to transfer existing credit card debt onto a new card with a 0% interest rate for a set period, potentially saving you hundreds of pounds in interest.

However, there are some crucial rules to follow to make the most of these deals:

Always pay the minimum monthly repayment. Missing a payment could result in losing your 0% interest deal, incurring fines, and damaging your credit score.

Clear the debt within the interest-free period. To avoid paying interest after the promotional period ends, make sure you can pay off the entire balance within the 0% timeframe.

Don’t use the card for new purchases. The 0% deal usually applies only to transferred balances, and using the card for new spending could result in hefty interest charges.

Check your credit score. The best deals are often reserved for those with a strong credit rating, so it's worth checking your score before applying.

Steere said: “TSB is still the frontrunner this week, offering a huge 38 months interest-free on balance transfer. However, the balance transfer fee for this card is also one of the highest on the market at 3.49%. You can still get nearly 3 years interest-free, but with a lower transfer fee of 2.95%, with Virgin Money’s 35-month Balance Transfer Credit Card.

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"Or you can avoid the fee altogether with the Barclaycard Platinum 14-month Balance Transfer card - but you’ll need to be confident that it gives you long enough to get debt-free."

If you travel frequently, a credit card for air miles can help reduce the cost of flights and even unlock perks like flight upgrades and hotel stays. By using these cards for everyday purchases, you can earn points that can be redeemed for flights with your favourite airline’s loyalty programme.

Read more: How to use your Avios points for more than flight tickets

1. Earn miles: Points are usually earned based on the amount you spend and the class of your ticket — premium tickets often earn more points.

2. Redeem points: You can use points to cover the cost of flights or upgrades, though taxes and fees may still apply.

Steere said: "When it comes to reward cards, it's worth carefully considering whether a monthly fee justifies the benefits. Take the Barclaycard Avios Plus card, for instance: it offers 25,000 Avios when you spend £3,000 in the first 3 months and earns 1.5 Avios per £1 spent thereafter, but comes with a £20 monthly fee.

"By contrast, the standard Barclaycard Avios Card has no monthly fee and offers 5,000 Avios for spending £1,000 in the first 3 months, with an ongoing rate of 1 Avios per £1 spent. The key is to choose a card that aligns with your spending habits. Don't be tempted by a generous welcome bonus if the fee-paying card won't deliver good value over the long term."

Planning a trip abroad? A specialist travel credit card can save you a bundle by offering near-perfect exchange rates without the usual foreign transaction fees.

Most credit and debit cards charge around 3% on foreign transactions, meaning a £100 purchase abroad could cost you £103. On top of that, some cards add a flat fee for every overseas transaction.

Specialist travel cards waive those fees, letting you spend abroad at the same rates your bank gets.

1. Avoid cash withdrawals, as they often come with fees and interest.

2. Use the card for spending abroad to enjoy near-perfect exchange rates.

Steere said: “If you want to kick off your 2026 travel goals, there are great offers at the moment to help you avoid currency conversion fees overseas, and you can even earn cashback on your spending (at home or abroad).

"Lloyds offers 1% cashback on all spending for the first 12 months with its new Ultra card, while you can get 1% cashback on eligible travel spending with NatWest (NWG.L). Just be sure to pay your card off in full each month to avoid paying interest (which would soon outweigh any cashback).”

Disclaimer: The opinions expressed are the author's alone (unless stated otherwise) and have not been provided, approved, or otherwise endorsed by the providers listed. Yahoo does not earn any commissions from the lenders, or any other third party from the content in this series.

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