A credit card can be a great addition to your finances but it’s important that you find the right one for your needs.
That’s why you should always compare your options. Use our smart search first to see which credit cards you’re eligible for without affecting your credit rating.
It allows you to move an existing debt over to a balance transfer card which has either a 0% interest introductory period or a low interest rate.
Be aware of any transfer fees and the interest rate you’ll be charged when the interest-free period ends.
If you already have debt, you may feel like a credit card isn’t an option. There are, however, credit cards for those with bad credit scores.
If you’re accepted for one of these cards, you can spend on them and repay in full each month to help improve your credit record.
These cards will usually have a high interest rate attached to them, so it may be worth looking into different ways to pay off your existing debt.
You’ll be charged no interest on purchases, balance transfers, or both in some cases.
This will be for a set amount of time, after which you’ll start being charged interest.
If you don’t make your minimum monthly payments, you could find that you lose your interest-free period.
A credit card allows you to make purchases on credit or transfer an existing balance. You can spend up to a pre-set credit limit set by the provider, then either pay off your bill in full each month or make monthly instalments.
You’ll need to pay at least a minimum monthly amount, which will be set by the provider depending on your balance.
Every credit card has an interest rate attached to it which is the percentage you'll be charged on top of the amount you already owe. The interest rate your provider charges you will largely depend on your credit rating, as well as the provider’s own criteria.
Certain credit cards have an introductory period when you take them out.
During this time, you may have 0% interest on purchases or balance transfers but watch out for other fees and always be certain of when it will end as you’ll start being charged interest.
If used sensibly, they can help you spread the cost of big purchases, earn cashback and loyalty points, give you consumer protection, and they could even help cut the cost of any existing debt you may have.
We’ve got five tips to help make your credit card work harder for you.
If paid off promptly, cards can give you an interest free, short-term, flexible loan
Do you pay it off straight away or keep longer-term debt? Figuring this out will help you decide which is the best card for you
A smart search will show you cards you’re likely to be accepted for before you apply, and won’t affect your credit rating
Transfer existing debt over to a new card that charges either a very low interest rate, or gives you an interest-free period
If you intend to stop using an old card, then make sure you cancel it and cut it up as soon as your debt is moved across or paid off
There’s a lot of choice out there, and we can help you compare the different types to find one that suits your needs.
Purchase cards can offer a long, interest-free period before you have to pay, meaning you can spread the cost of a major purchase.
Be sure to at least pay your monthly minimum payments to avoid fees that can stack up and make sure you repay the balance in full before the interest-free period ends to avoid paying any interest.
A reward credit card does exactly what the name suggests - it will reward you for your spending, and generally you'll earn points to redeem via a rewards scheme, for example, Tesco Clubcard, Nectar or Air Miles/Avios.Find out more >
Cashback cards allow the holder to earn back a percentage of what they spend as an annual bonus, with some lenders paying as much as 5%.
Just be sure you can clear your balance in full each month, or the interest you pay will soon outstrip the money you earn.
A business credit card, also known as a company credit card, is used by you and your employees to make purchases for the company.
They may offer rewards, cashback and travel insurance, but beware of annual fees.
If you can handle your finances responsibly, student credit cards will work in the same way as standard credit cards, with the chance to spread the cost of purchases.
Make sure you at least make your minimum monthly payments to avoid charges.
Prepaid cards let you load a chosen amount of money onto a card, which can then be used at cash machines and to make purchases.
Unlike with a credit card there's no credit arrangement involved, which means there won't be any interest to pay and there's no need for a credit check.
Your credit rating is a way of showing how risky it would be to lend to you. The better your rating, the more likely you are to be accepted for a credit card.
If you have a bad credit rating, you may be rejected if you apply for a credit card and this can leave its mark on your credit rating.
Use our smart search instead to see which options are available to you, without leaving a trace on your credit score.
If you don't pay off your debt in full each month you're likely to be hit by interest rates - these can be very high and there's a danger that debt can get out of control.
Also, using credit cards for cash withdrawals can be expensive - you'll be charged interest as soon as you get the money and will have to pay a fee for every withdrawal.
If you're struggling with repayments, speak to your lender as a first port of call. The lender won't want you to default on the debt and may find a way to help.
You can also contact your local Citizens Advice Bureau, National Debtline, Money Advice Service or StepChange Debt Charity (formerly the Consumer Credit Counselling Service) for advice.