Credit-card firms love new customers and are willing to pay £40 to £80 to acquire them, a fraction of their potential future profits. This materialises in a variety of ways: heavy advertising spend, introductory 0 per cent offers, and free gifts or sign-up inducements.
It’s here the consumer revenge comes in. Simply sign up for a card, grab the freebie and then cancel, without earning them a penny. The only downside is a limited impact on your credit score, but let’s do the fun stuff first.
The gifts aren’t doled out on application or acceptance. The trigger point is usually spending on the card. Yet, laughably, most providers don’t set a minimum spend, meaning it becomes an esoteric challenge to spend as little as possible.
Because most supermarkets allow credit cards to be used for any payments, you could buy anything from chocolate to toilet cleaner. But do ensure you pay off the card in full at the end of the month, to avoid any interest.
Some of the best freebies come from direct mail shots or e-mail offers, but the following are my top picks from those available to all.
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Fancy a BMI flight to Russia, Turkey or elsewhere? The BMI Classic Mastercard (not to be confused with the BMI card) offers 20,000 BMI miles to new cardholders who spend within 90 days. This is enough for a return flight to a zone 2 country, including Russia and Turkey. A couple or friends could apply simultaneously to fly together, but must pay about £50 for taxes and charges.
Next best is a Sony Walkman MP3 player. Get a Sonycard and spend within 28 days and you’ll receive up to 8,200 Sony Pulsebeats reward points, enough for a Walkman MP3 player that usually costs £45, or a range of other gifts. The full 8,200 points are only available via certain websites, such as Find.co.uk.
This card also allows you to shift other debts to it at 0 per cent for 12 months, though with a 2 per cent fee — a competitive, but not quite market-leading deal. If you do want to shift debts and grab the freebie, spend only the very minimum because while balance-transfer debts attract interest at 0 per cent, debts from spending cost 15.9 per cent and can’t be repaid until the shifted debt has been cleared.
The Amazon credit card offers a £15 gift voucher to new cardholders. It also has a six-month introductory 0 per cent offer on purchases which, while far from being a best buy, isn’t too bad.
While all this freebie grabbing is perfectly legal, the card companies don’t like it. Simply printing this column may mean some deals are speedily changed. So act quickly and check the terms.
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Every credit application adds a search to your file, which can harm your ability to gain new credit. Those with good credit histories shouldn’t unduly worry though; many people have successfully applied for 10 freebies without problems.
The trick is to space out applications because making a large number in a short space of time looks as if you’re desperate and hits your credit score. After the first couple of freebie grabs, spread them out every four or five months, and always cancel unused cards.
Those with poor credit histories or who are likely to need new cheap credit or a mortgage imminently should back off freebie grabbing.
For more on managing debt visit www.timesonline.co.uk/borrowing