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Cut car insurance costs with a 0 per cent credit card

A row of cars for saleHow a credit card could save you money on your car insurance. It’s all to do with avoiding the extra cost that comes with paying for your cover monthly.

Some drivers are wasting hundreds of pounds a year because they opt to pay for their car insurance in monthly installments.

While paying monthly may be a more manageable way to spread the cost of car cover, especially for younger drivers, it’s certainly not the money-saving option. This is because insurers charge interest for the privilege of paying in installments.

But short of having a lump sum of cash to hand, you may think that paying monthly, although more costly, is your only option.

However, there are now a number of credit cards charging 0 per cent interest on purchases. Opt for a card with at least a 12-month interest free period and you’ll have the best of both worlds – paying for your insurance in one go and repaying the credit card debt in manageable, monthly interest-free chunks.

Zero per cent credit card best-buy's

There are currently a number of credit cards on the market offering 0 per cent interest on purchases.

Tesco’s Clubcard charges no interest on purchases for the first 15 months, after which the rate reverts to 16.9 per cent. 

Natwest is offering its existing customers a 13-month interest-free deal which reverts to 17.9 per cent at the end of this period.

And Sainsbury’s, Barclaycard and Halifax are all offering interest free deals for 12-months.

Other ways to cut the cost

The Association of British Insurers (ABI) say vastly increased car insurance premiums are down to three main things: uninsured drivers who add on average £30 a year to car insurance policies; fraudulent claims which add £41 a year;  and legal fees incurred in settling personal injury claims, also £41 a year.

With the average comprehensive car insurance premium standing at £835 - a £220 a year rise on last year according to the last Confused.com/Towers Watson Car Insurance Price Index - it’s well worth shopping around to make sure you’re getting the best deal.

Don’t overestimate your mileage

Mileage is one of the rating factors insurers use to calculate a person’s premium so it pays to spend just a little time trying to estimate as best as you can how many miles you’re likely to drive each year.

Gareth Lane, motoring analyst at Confused.com, says: “Overestimating your mileage will likely increase your premium and result in you paying more than is necessary. 

“Looking at past MOT certificates which record annual mileage at the time of the MOT will help your calculation.”

Higher excess, lower premium

Consider a higher voluntary excess to cut your annual premium. This is an amount you choose to pay in the event of a claim. In return for opting for a higher excess, the insurance provider will usually lower the premium. But don’t forget that the voluntary excess will always have to be paid in addition to any compulsory excess, so you could end up out of pocket in the event of a claim.

Value your vehicle accurately 

It’s incorrect to assume the higher you value your car the more money you’ll receive in the event of a claim. Insurers will only pay out the current market value of the vehicle so inflating the value of your vehicle serves no purpose other than increasing your car insurance premium.

To calculate your estimated car insurance costs try our handy car insurance price index calculator where in seconds you can get the average car insurance costs by age, sex, and region.



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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick reports on all things personal finance at Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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