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Credit cards

Compare credit card deals and check your eligibility [1]

  • Find out which credit cards you’re eligible for
  • Your details will be used for a soft credit search
  • This will not affect your credit rating
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Man taking a walk in the park with his laptop and credit card.

How do credit cards work?

Credit cards can provide you with a convenient and flexible solution for borrowing money - providing you with a way to buy goods and services and pay for them later.

When you take out a credit card, you’ll be given a credit limit - this is the maximum amount that you’re allowed to spend using the card.

If you pay off your monthly balance in full you won’t be charged any interest. But if you only pay part of what you owe, the remaining amount is carried over to the next month and you’ll be charged interest on the whole balance.

There will also be a minimum amount that you will need to pay off each month, if you don’t clear the entire balance.

Young adult woman with her dog looking at deals on her laptop

What types of credit card are there?

There’s a range of different types of credit cards available which are designed to suit different needs and purposes.

The most popular types include:

Cashback and reward cards

Earn rewards or cashback each time you use your card. You can build up points to redeem at your favourite stores or get paid back a percentage of the money you spend onto your account, allowing you to earn money as you spend.

0% purchase cards

These cards offer interest-free periods on purchases for a set period, which can run from a few months to longer than a year. 0% purchase cards are designed to be used for shopping and big purchases, as they allow you to spread out the cost of your spending.

Find out more about interest-free credit cards.

Balance transfer cards

Balance transfer cards offer a 0% interest period on sums that have been transferred onto the card. These are a useful option if you have a large outstanding balance on an existing card, and want to pay it off in stages without incurring any interest, meaning you can clear the balance more cheaply. You will usually need to pay a transfer fee which is calculated as a percentage of the sum being transferred.

Money transfer cards

With a money transfer card you can move money from the card into your bank account, perhaps to get you out of your overdraft. You then have a set period of 0% interest, allowing you to clear the balance in manageable stages. As with balance transfer cards, you will need to pay a transfer fee which is worked out based on how much you are moving from the card into your bank account.

Also, the full balance would need to be cleared before the 0% interest period ends, otherwise you will pay interest on the remaining balance.

Air miles credit cards

These cards allow you to earn travel perks and rewards like air miles and Avios points on your spending, as well as benefit from discounted travel-related services and flights. These cards often come with a high annual fee and minimum spend amounts, so they’re not right for everyone.

Travel credit cards

Making purchases on your card when you’re abroad can incur hefty fees. Travel credit cards can make it cheaper and more convenient for you to spend when you’re away as they don’t charge fees on purchases.

Credit building cards

If you have a low or poor credit history, these cards can help you build your credit score. Paying the monthly repayment in full and on time each month will show lenders you’re reliable and help you access better credit options in the future.

What type of credit card is best for you?

Different credit cards are designed for different needs, so which card is best will depend on what you want to achieve and what you plan to use the card for.

You can use a balance transfer credit card to consolidate your debts onto one card with a low or no-interest period which can help you clear the balance more quickly.

If you’re planning to buy something expensive, a 0% credit card can help you spread the cost out over several months without needing to pay interest.

Whereas if you’re able to pay off your balance in full every month, you can actually save money by using a reward card to earn loyalty points, air miles or cashback as you spend.

It's also worth reviewing all of your options before using a credit card to purchase something. For example, saving up could be a better option.

Ultimately, you’ll need to consider what your goal is and what you can afford to pay back. Then you can compare different credit card providers to find the best deal for you.

What are the advantages of having a credit card?

Some of the benefits of using a credit card include:

  1. Purchase protection

    You could be covered by buyer protection on card purchases between £100 and £30,000, which can help you claim your money back if there’s a problem

  2. Earning rewards

    There are plenty of credit cards available that will earn you rewards, travel perks and cashback as you spend. These accounts usually come with a monthly fee and high interest rates so you would need to ensure you repay the balance in full every month. If not paid in full, the interest payments could outweigh the benefit of cashback.

  3. Building your credit rating

    Using your credit card in the right way can help you build a positive credit history and increase your future chances of accessing better credit deals

  4. Going interest-free

    There are plenty of cards available that offer 0% interest for balance transfers and provide interest-free periods for new purchases

How do I compare credit cards?

There are plenty of options to choose from, but it’s important you find the right card for your needs.

  1. Use our smart search and browse your options

  2. Provide your contact details

    Your name, date of birth and email address

  3. Let us know where you live

    Tell us whether you’re a homeowner and how long you’ve lived at your address

  4. Tell us about your finances

    We’ll need to know your employment status and annual income

Can I get a credit card if I have a bad credit score?

A poor credit score can make it much harder for you to be accepted for a credit card.

However, all is not lost, as some providers offer credit builder cards that have been designed for exactly this situation.

Using a credit-building card can help to show that you’re able to make regular repayments and rebuild your credit score.

To boost your credit rating, you’ll need to pay off your balance in full, stay well within your credit limit and not build up a large amount of debt.

Are there any downsides to using a credit card?

While credit cards can offer great flexibility and benefits, there are some drawbacks you’ll need to consider before you take out a card.

The disadvantages include:

The potential for debt

A credit card can create the temptation to overspend, with you buying more than you can afford to pay off and needing to pay interest on top of this

Damaging your credit score

Missed repayments, going over your credit limit, and having ongoing debt can all negatively affect your credit rating

High interest rates

Credit card rates vary, but once any interest-free period ends you could end up being stung with a high rate, making your debt much harder to clear

Fees and charges

From annual fees to late payment charges, you’ll need to consider whether a credit card is worth the extra costs you might need to pay

Charges for withdrawing money

Using your card to take out money will incur a high rate of interest straight away, even if you’re still in an interest-free period

What’s the difference between a soft and hard credit check?

When you use an eligibility checker it uses what’s called a soft search on your credit history.

This means it doesn’t leave a trace on your credit report that lenders will be able to see, even if the check shows you’re unlikely to be approved for certain cards.

When you make an application for a credit card, lenders will do an in-depth inspection of your credit report to understand your financial behaviour - this is called a hard credit check.

Each hard check is recorded on your credit report, so if you make several credit card applications within a short amount of time, this could signal to lenders that you’re struggling to manage your finances. This can then dent your chances of being accepted.

Will I be accepted for a credit card?

This will depend on several factors including your age, income, financial situation and your credit score.

You’ll usually need to be over 18 to qualify and meet income requirements.

And lenders will also use your credit history and score to decide whether your application is approved.

Be aware that every application you make is logged on your credit report and if lenders see you’ve applied for several cards in a short timeframe this can raise a red flag.

To avoid this, it’s best to use an eligibility checker first - this will tell you which cards you’re most likely to be accepted for without affecting your credit rating.

Getting the most from your credit card

Credit cards are a flexible and convenient way to manage your spending, and you can maximise the benefits by using them in the right way:

  1. Improve your credit score

    By using your card responsibly and making your payments on time and in full, you can boost your credit score.

  2. Consolidate your debts

    Make the most of 0% balance transfer offers and move your debts onto one card with a much lower interest rate to help you clear them more quickly.

  3. Set up a direct debit

    A direct debit can make sure you never fall behind with payments and risk losing the benefits that credit cards offer.

WHAT HAPPENS IF I MISS A CREDIT CARD REPAYMENT?

It’s really important that you make at least the minimum payment each month. If you don’t then you will face an additional charge from the card provider.

More seriously a black mark will be added to your credit record. This will remain on your record for six years, and may impact your chances of getting credit in future.

What should I do if I can't make my repayments?

You should contact your lender as soon as possible, they may be able to come up with a payment plan to help you get back on track.

You’ll need to work out what you can afford to pay. If you can afford it, you should pay at least the minimum required amount.

If there’s a temporary problem with your finances - for example, you’ve lost your job - the credit card company may let you pause your payments until you’re back in employment. Interest will still be charged at the normal rate and will need to be paid when you resume your payments.

If you’re struggling with money, you can access free debt help backed by the government and from debt help charities. You can get impartial expert advice from a trained debt adviser who will work with you to find a solution.

FAQs

Generally, the better credit rating you have the easier it is to get a credit card.

If you’ve got a good credit score, you’ll usually find it easier to be accepted for rewards cards, cashback credit cards and air miles credit cards.

On the other hand, if you have a low or poor credit rating, you’ll find it easier to be accepted for a credit builder card.

And if you’re in full-time education and over 18, you may be able to get a student credit card which is designed for people without much credit history.

With careful use, both of these options can be used to boost your credit history and help you access more credit options in the future.

This will largely depend on how you apply. Online applications are the fastest way and can be completed in a matter of minutes - some lenders will also give you instant approval.

For other cards, it may take around five to 10 days for lenders to make a decision. And if you apply in a branch or through the post, the overall process will take longer.

Once approved, you should receive your card within 10 working days.

There’s a wide range to choose from and which type is best will depend on your situation and what you want the card to do for you.

For example, if you’re confident you’ll be able to pay your balance in full each month, a reward or cashback card could be a good option and can help you earn while you spend.

Or you might want to spread out the cost of a large purchase - a 0% purchase card could provide you with an easy way of doing this.

And if you want a way to help clear your existing card debts, moving them to a balance transfer card with a lower or interest-free period could work well.

So you’ll need to consider which type of card will best suit your needs and then shop around to find the best deal.

Credit card providers will advertise the rate of interest charged on their cards using APR, or the ‘annual percentage rate’. This is what you will pay outside of any promotional period, such as an initial 0% period. Importantly lenders only have to offer the advertised rate to 51% of successful applicants, so even if you are approved you may end up with a higher interest rate.

Being able to spend now and pay back later can be appealing, but there’s a lot more to consider if you’re thinking of taking out a credit card.

They come with plenty of advantages, including purchase protection and the ability to boost your credit score, along with options to earn rewards and spread out the cost of spending.

But you’ll need to weigh up their benefits with the risks, including the potential to quickly rack up debt.

If you struggle to control your finances or prefer using cash for most of your spending, a credit card probably isn’t the right option for you.

On the other hand, if you’re confident about managing your money and being able to clear your balance every month, credit cards can be a useful tool.

There are several reasons your application might be declined, so it’s best to be aware of these before you apply.

The most common reasons for being rejected include:

  • Having a low credit score - If you miss payments or go over your credit limit this can negatively affect your credit rating
  • Your income is too low or unstable - If you don’t earn enough, or you regularly change jobs, lenders will see you as more at risk of not being able to make your payments
  • Not enough credit history - If you haven’t had credit before, or are fairly new to it, the card issuer won’t have enough information on how you manage your borrowing
  • Previous late payments - These will appear on your credit report and lower your credit score - even one late payment can increase your chance of being declined
  • You’ve got too much existing debt - Having several debts can make it harder to keep up with your payments, which presents more of a risk to potential lenders
  • Making too many applications - Applying for several cards in a short timeframe can make it look like you’re struggling financially, which will negatively affect your credit score

Whatever you don’t pay off on your credit card balance one month is rolled over to the next month and interest is then added to the whole amount.

If you don’t pay off more than the minimum amount each month, it could potentially end up costing you hundreds or even thousands of pounds in interest and taking years to pay off.

If you make very low payments for 18 months, lenders are required to contact you and suggest higher affordable payments. If you don’t increase what you pay for more than 36 months, your account could be suspended. Your lender will be required to help you come up with a reasonable way to repay your outstanding balance.

You can check your credit report for free from one of the UK’s credit agencies - the three main agencies are Experian, Equifax and TransUnion.

The free reports will give you a snapshot of your credit history but usually don’t include a credit score.

However, the three main agencies can provide a more comprehensive report for a fee. You can usually sign up for a free 30-day trial to access this information.

The good news is that there are plenty of ways you can improve your credit score.

These include registering on the electoral roll, making regular payments on time, and keeping your credit utilisation low - in other words, only using around 30% of your credit limit.

You should also check for any errors or mistakes on your credit report to make sure all the information is correct and up to date.

Taking out a credit builder card is another way to help rebuild your credit score, you can use this to show lenders that you can manage money responsibly.

While you can’t have a credit card account in more than one name, you can add additional cardholders to your account.

Each cardholder will have their own card and share the credit limit on your account, but the responsibility for paying off any debt and fees incurred on the account will remain with you.

If you apply for a credit card, the rate you’re offered might not be the same as the advertised APR.

Lenders must give the representative APR to at least 51% of successful applicants, but the rate you’ll be offered will also depend on your credit rating.

A lower credit rating will usually mean you’ll be offered a higher rate of interest.

Getting a credit card from your bank can offer you the convenience of having all your accounts in one place and provide some reassuring familiarity with its website and app.

But by sticking to your bank, you may be missing out on much better offers and rewards elsewhere.

Because of this, it’s always best to shop around and compare deals before you decide.

Useful links

View all credit card guides

Page last reviewed: 14 September 2023

Page reviewed by John Fitzsimons

[1]Gocompare.com introduces customers to Experian Limited, which is authorised and regulated by the Financial Conduct Authority. Gocompare.com’s relationship with Experian Limited is limited to that of a business partnership, no common ownership or control rights exist between us. Please note, we cannot be held responsible for the content of external websites and by using the links stated to access these separate websites you will be subject to the terms of use applying to those sites