Whether you are in credit card debt, are planning on making a large purchase, have a less-than-ideal credit score, or are simply gearing up for your holidays this summer, finding the best credit card can save you a fortune, so it's well worth doing a bit of legwork.
Here's our guide to help you find the right credit card for your individual circumstances...
Have you already got a credit card? A)
Yes, I have existing credit card debts
GO STRAIGHT TO SECTION TWO
B) No, and I'm worried I won't qualify due to my credit rating
If you have missed credit card payments in the past, or defaulted on any other debts, the chances are you will be turned down by most standard credit card providers.
However, there are credit cards available which are specifically designed for those with a poor credit history, and these can be an ideal way to help you prove your money management skills and boost your credit score.
Barclaycard's Initial Card is suitable for those who might have had a County Court Judgement (CCJ) against them a year or more ago, or who have missed a payment or two in the past. The card offers 0% on purchases for the first three months, but then has a steep representative annual percentage rate (APR) of 29.9%, so you should clear any debts as soon as possible.
C) No, but I have a good credit score and want a card for purchases
GO STRAIGHT TO SECTION THREE
Do you plan to clear your existing credit card debts soon?
A) Yes, I want to clear them quickly and not run up further debts
Many people are paying far more than they need to for their credit card debts by failing to make
the most of balance transfer credit cards offering lengthy 0% introductory rates.
Barclaycard's Platinum Credit Card with Extended Balance Transfer, for example, has a 0% introductory rate on balance transfers for 22 months.
After the introductory period ends, the card has a representative APR of
17.9% (variable), so make sure you clear what you owe before this kicks in. Barclaycard is currently offering a £30 fee refund on transfers over £2,500, making this deal even more competitive.
Alternatively, Halifax offers an equally generous 22-month 0% introductory rate on its
Balance Transfer Credit Card, but has a higher balance transfer fee of 3.5%. When the 0% period finishes, the card has 17.90% representative APR (variable).
B) No, I'm not in a position to clear my debts any time soon
If you know you won't be able to pay off what you owe quickly, it may be worth opting for a low standard rate credit card rather than a 0% introductory card. As the name suggests, these offer a consistently low rate, so you don't have to worry about being hit by steep interest charges, or switching cards every few months.
Sainsbury's Low Rate Credit Card, for example, offers a market-leading 6.9% APR, but is only available to Nectar customers. There is no balance transfer fee.
Barclaycard Platinum Simplicity card offers an APR of 7.9%, and again has no balance transfer fee. You must have a good credit rating to apply for either of these cards.
C) Yes, I want to pay them off soon, but want to use the same card for spending
Those looking to transfer existing debts and who want to use the same card for new spending too, should look for a card which offers a 0% introductory rate on both.
Halifax All in One card, for example, offers a generous 15 months at 0% on both balance transfers and purchases. After the 15-month introductory 0% period ends, the card has a representative APR of 17.9% variable. Balance transfers are subject to a 3% handling fee.
Another option worth considering is
Barclaycard's Platinum with Purchase card, which again offers 0% on purchases and balance transfers, but has a marginally higher representative APR of 18.9%. There is a 2.9% balance transfer fee. SECTION THREE
Do you plan to clear your balance every month?
A) Yes, I plan to pay off what I owe in full every month
If you are confident that you can pay off what you owe every month, then you should go for a card which offers generous cashback or rewards on your spending.
American Express Platinum Cashback card, for example, pays an introductory rate of 5% cashback on your first £2,000 spend for the first three months. Once the introductory rate ends, you'll earn the standard rate of cashback which is 1.25%.
Customers also receive double cashback,
2.5%, every year during their anniversary month (the month they first took the card out in) as long as they've spent £10,001 or more on their card over the previous 12 months.
There is, however, an annual fee of £25 on the card. As a result of the fee, the representative APR is
If you prefer to earn rewards rather than cashback, then the current market-leading reward card is the
M&S Credit Card. You earn one point for every £1 spent at M&S, and one point for every £2 spent elsewhere.
Once you have 100 M&S points, you'll get a £1 reward voucher to spend in store. Points are converted into vouchers four times a year and are valid for 15 months. The M&S card offers 0% on purchases for 15 months and after that has a representative APR of
B) No, but I'm hoping to pay off what I owe relatively quickly
If you are confident that you can clear what you owe in a matter of months, then your best bet is likely to be a card which offers a 0% introductory rate on purchases for a limited period.
For example, both the Marks & Spencer Credit Card, mentioned above, and the
Tesco Clubcard Credit Card, offer 0% on purchases for 15 months.
You must make sure you pay off your debts before the interest-free period ends or you'll be charged representative APRs of
15.9% and 16.9% (variable) respectively.
Both of these cards reward you when you spend. With the M&S card, you earn one point for every £1 spent at M&S and one point for every £2 spent elsewhere. The Tesco card gives Clubcard points at a rate of one point for every £4 spent.
C) Yes, but I want one specifically for holiday spending
If you plan to pay by plastic while you're overseas this summer, then you should think about applying for a card soon, as applications can take several weeks to process.
The best credit card for overseas use is the Clarity credit card from Halifax as it has no foreign exchange fee anywhere in the world. It also doesn't charge a fee for cash withdrawals, although you will be charged interest on them at a representative APR of 12.9% (variable) even if you repay in full. One of the next best options is Nationwide Building Society's Select credit card which has no foreign exchange fee anywhere in the world, although it does charge a 2.5% fee for cash withdrawals. You'll also be charged a representative APR of 27.9% (variable) even if you repay in full. This card is only available to existing Nationwide FlexAccount customers.
Please note: Any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.
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