Credit Cards And Car Insurance Can Go Together

With car insurance prices still rising, many drivers are looking for ways to save money. Is using a credit card to pay for the insurance a sensible option?

Buying car insurance is a huge part of the cost of owing a car. It is mandatory to have it. But with such a big cost, to keep it manageable, some turn to buying it through monthly instalments.

However, according to research by moneysupermarket.com, most insurers charge their customers for this privilege and those who decide on monthly repayments can expect to pay on average an additional 10.68% to the cost of the original premium.

By shopping around though this can be significantly reduced – down to as little as a 5.34% increase.

Rather than monthly instalments, another option is to pay for your car insurance premium using a 0% purchase credit card – such as the Nationwide credit card or a Virgin credit card.

If you opt for this route be careful. As Pete Harrison, car insurance expert at moneysupermarket.com, said: “You need to be disciplined if you use a credit card, and aim to pay off the balance before the end of the promotional period, and within 12 months if the promotion is longer otherwise you will still be paying when your insurance is up for renewal.”

MoneyHighStreet comments: “In addition to finding the optimal payment option that suits you, there are a number of other ways you can save money on your car insurance. For example, make sure you only take out the cover you need – do you need overseas travel included, can you reduce your annual mileage or increase the excess payment?

Make sure you understand what you are buying too. What’s included in a so called fully comprehensive policy can vary significantly across different insurers. For example in some a courtesy car will be included within the costs quoted, with others there will be an additional charge. Do you need one? If not you may be better to opt for a cheaper price that doesn’t include one.