Finding The Right Credit Card For You

Credit cards can be the cheapest way to borrow money if you know how to take advantage of the benefits. When applying for a credit card, make sure to consider all the pros and cons to avoid being stuck in debt. In this article, we shall examine:

  • What a credit card is
  • What you can use a credit card for
  • The different types of credit cards
  • Pros and cons of using credit cards
  • Finding the credit card that suits you

What is a credit card?

Using a credit card is similar to a loan. It can help you to spread the cost of a purchase over an extended period at a predetermined interest rate. However, clearing the balance in full when receiving your statement every month means your loan is interest-free. You will be charged interest at a 19% rate typically, but rates vary.

What a credit card can be used for

Whatever your financial state may be, the need to borrow money can arise in a number of situations. Whether it may be an emergency expenditure, wanting to book a family holiday, or making a purchase of goods or services, credit cards offer you the possibility to proceed with your purchases immediately.

A woman is shown using her credit card at a store

When using credit cards to make your purchases, you may be able to take advantage of certain offers with cashback cards and reward cards. By comparing cards, you would be able to find the one that best suits your purchasing needs or to help you pay an existing debt as we will discuss below.

Different types of credit cards

There primarily three different types of credit cards that you should know about before you apply for one:

  1. 0% spending cards allow you to proceed with a purchase for which you’ll have to pay no interest for a predetermined period (this varies by card). With an eligibility checker, you would be able to find out if you are able to apply for a 0% interest rate card and decide which one would be the best deal. Note that by making a credit card application, your credit file will be marked and this could affect your credit rating. Therefore, make sure you are eligible before proceeding with your application.
  2. Reward cards can offer you cashback rewards and loyalty points at certain retailers. Cashback rewards typically earn you money back for every purchase that you have made. Reward cards, specifically, can earn you points while you spend. These points may be redeemed for goods, services, air miles, or vouchers depending on the credit card that you choose.
  3. Balance transfer cards are a different type of card which allows you to move an outstanding credit card balance to a new card. The reason that one may wish to proceed to apply for a balance transfer card is that typically one would switch to a credit card that charges 0 interest for a predetermined period or a lower representative APR. You would usually have to pay a balance transfer fee, so this is something that you should look out for when applying.

Advantages and disadvantages of credit cards

Credit cards can be helpful when you wish to proceed with a purchase or clear off existing debt. By choosing to spend with a credit card, you are also protected by the Consumer Credit Act which effectively means that you are protected in the case of receiving faulty goods or not receiving what you purchased at all. Furthermore, a credit card can help you to improve your credit report and credit score, which in turn can help you to borrow money with a loan with favourable terms.

When spending with a credit card, you are covered by the Consumer Credit Act

Naturally, this form of easy access to credit can lead to certain problems. Even with the best credit card deal, you could be led into a situation where the debt has mounted up, and you are unable to make your monthly repayments. This would impact your credit score negatively as a consequence. Missing a payment could also incur a penalty fee that would have to pay on top of your existing debt.

Missing a payment could also incur a penalty fee that would have to pay on top of your existing debt.

Getting into this type of situation means that it’s unlikely that in the near future you would be able to apply for a good credit card deal, as card issuers favour those with an excellent credit score. To avoid debt problems with credit cards, make sure that you consider your financial position before every purchase and make sure to at least make the minimum payments into your credit card to avoid extra fees and charges.

How to find the credit card that suits you

When you compare credit cards, it is important to think about what you need for and how exactly you will be using it. Clearing your balance in full every month certainly gives you more options. However, if you are uncertain that you will be able to pay off the balance in full monthly, why don’t you use an eligibility checker to help you decide the type of credit card that is right for you. If you have an outstanding debt, then clearly a balance transfer card may be your only viable option to move forward and help you pay off your debt.

A man is depicted using his credit card to make online purchases on his laptop

If on the other hand, you are in the position to make purchases of goods and services, then you wish to seek a 0% interest credit card deal or a reward card instead. As there are hundreds of credit card deals to choose from, by following our guide and using our resources you should be able to reach a decision on which credit card is right for you within moments.

Questions and answers about credit cards

What is APR?
APR is Annual Percentage Rate, and this figure represents how much the cost of borrowing money with a particular credit card will be. It is comprised of your interest rates and charges/fees of your card issuer. The term ‘representative APR,’ which is commonly used when credit cards are advertised, means that the card issuer only has to offer this APR to 51% of successful applicants, which means that there is the likelihood that this is not the APR you will be offered when proceeding with your application.
Does the interest rate change?
Whereas you may think that once you agree on certain interest rate with your card issuer that it will be set, there is the possibility that your interest rate may change. Credit card issuers can change interest rates at any time. Therefore, it is a good practice to keep your credit balance in check. Do not forget that a 0% interest rate spending card is always for a limited period, so once this time passes you will be charged normally with an interest rate.
Can I find out my credit rating?
Your credit rating, or credit score, is a figure which represents to credit institutions what your creditworthiness is. This means that if you have a good history of borrowing and paying back credit, it is more likely that you will be accepted for credit applications. You may wish to look into different ways to improve your credit score if it is low. It doesn’t cost anything to check your credit rating online with any of the three main credit reference agencies: Experian, Equifax, and CallCredit.
Can I apply for credit with a bad credit score?
If you have a bad credit rating, this won’t stop you from being able to apply for a credit card, but it is certain that you would not be eligible for the best credit card deals. However, some card issuers have specific credit cards on offer that can help those with a bad credit score to build it up again. Over time, you would be eligible for good credit card offers if you are able always to pay off your balance fully when spending on credit.
What happens if I get rejected for a credit card?
Getting rejected for your credit card application can leave a mark on your credit history. In turn, this could affect other credit applications you may wish to proceed with in the near future. Therefore, it is very important to use an eligibility checker to be able to assess the chances of being accepted for a specific credit card in the first place. This way, you wouldn’t risk affecting your credit score negatively after applying for a credit card.
Can I pay off my credit card early?
Unlike other forms of lending, borrowing money with a credit card allows you to repay your debts early if you wish. Effectively, you will not be charged an extra fee or penalty for making early repayments on your credit card account. You may wish to employ this tactic to stay ahead of your credit balance and avoid missing monthly repayments.
Can 0% spending cards be used for balance transfers
While it may seem ideal, 0% interest rate spending cards cannot be used for free balance transfers. While it is possible to shift existing debt into this type of credit card, there will be some interest rate that would apply to the balance transfer. Therefore, if your priority is to pay off existing debts, it is a better choice to apply for a separate credit card specifically for the purposes of transferring outstanding debt at a low interest rate.
How can I apply for a credit card?
There are many ways you can apply for a credit card. This may be done at the convenience of your home online, or you may wish to apply for a credit card over the phone. It is also possible to apply via post, or if you prefer, you may also visit your local building society or bank branch in person to fulfil your credit card application.
How long until I receive my credit card?
Usually, it takes approximately ten days for your card to arrive at your address after your application has been successfully processed. To avoid any delays, make sure you have correctly filled out your application and try to be certain that you are eligible for the credit card deal that you are applying for. You may start using your credit card as soon as you have both your credit card and PIN which arrives separately in the post.
Is APR the best way to compare credit cards?
The annual percentage rate that a credit card offers is usually the best way to compare credit card deals. Since APR accounts for the interest rated and separate fees and charges, it presents you with an annual average figure. Effectively, the lower the APR, the less you’ll have to pay overall on an annual basis. However, in some cases, APR can be unimportant. If you wish to make money transfers of outstanding debts to a balance transfer card, you may wish to pay attention to how long you will be eligible for the 0% interest period rather than the APR.

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