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Choosing your credit card

Ella Jukwey
Written by  Ella Jukwey
Donna McConnell
Reviewed by  Donna McConnell
5 min read
Updated: 11 Jan 2024

Credit cards are a useful tool for managing your money and there’s a wide range of different types to suit different needs. Our guide can help you decide which is right for you

Why get a credit card?

Credit cards can be a convenient way to manage your money, enabling you to pay for expensive goods and services and spread the cost over time. 

There are pros and cons to credit cards. If used carefully – by always repaying debts on time – a credit card can be a good way to build up your credit score. This can ensure you have access to the best loans and mortgage deals in future. But credit cards are a form of borrowing and if not managed well they can end up being expensive.

There’s a wide variety of different types of credit card on the market – from cards that enable you to make purchases with 0% interest for a time and those that allow you to transfer existing card balances and pay off the debt at 0%, to cards with rewards, cashback and perks. It’s important to think about what you need your credit card for to ensure you find the best deal for your needs. 

Man paying with credit card

How do credit cards work?

It’s important to understand how credit cards work before you apply. This is because different credit cards have different features and you’ll need to be sure you’re getting the right plastic to suit your needs.

All credit cards will give you a pre-agreed line of credit, such as £500 or £1,000. You can then spend using your card and the balance will build up on your card account – up to your credit limit. 

You’ll be charged interest on your card spending – your account balance – unless you pay it off in full each month, or you have a card with a special 0% interest offer for a limited period. You’ll always be required to repay a minimum monthly amount off your card debt. And ideally, to avoid incurring expensive interest charges, it is a good idea to try to clear your balance in full each month. 

While some types of credit card will suit those with existing debts who want to cut the cost of their interest payments, other cards suit those who can always pay off their balance in full each month and might want added perks – such as cashback – on their card spend.

credit card decision tree

What type of credit card should I get?

The type of credit card you get should suit the way you want to use it – or why you need it. For example are you looking to transfer debt from a more expensive credit card or do you want 0% interest on new purchases? Perhaps you clear your card balance each month and are looking for a card that will pay cashback or rewards on your spending. 

Here are some of the main reasons you might want a particular type of credit card: 

1. You want to reduce the cost of existing card debts

You may be able to benefit from a balance transfer credit card if you have an existing balance that you want to pay off quicker or with less interest. Many balance transfer cards come with low or 0% interest periods – in some cases for more than two years. This means you’ll be able to transfer your existing debt onto the new card and pay it off at the new lower or 0% rate. Consider deals with the longest 0% offer periods so you can maximise your chances of paying off your card debt during the interest-free time.

2. You want to build up a stronger credit history and rating

Credit builder credit cards can be useful for people with a low credit score and also those with a limited credit history – perhaps because they’re young or have never borrowed on a credit card or loan before.

Credit builder cards are designed for consumers who wouldn’t normally qualify for standard credit cards. They generally come with a higher interest rate and a lower credit limit – to reflect the slightly higher risk to the lender. But if you use them carefully and repay everything you owe in full and on time each month, you could:

  • Avoid paying any interest on what you borrow, effectively making your credit card a way to get an interest-free loan

  • Start to build trust with the lender, building up your credit history and boosting your score. This should make it easier to qualify for better credit products in the future

3. You’re looking for a card that’s cheap for purchases

If you have a large purchase to make – perhaps a holiday, electricals or furniture, it can be advantageous to pay for it with a 0% interest purchase credit card. These cards offer interest-free spending for a set period – with the best deals on the market this might be up to 23 months, for example. This can help you spread the cost of a large ticket item, paying if off over a longer time but without incurring interest. If this is what you need a credit card for seek out the longest 0% purchase card offers. Most purchase cards don’t have usage fees.

Buying expensive items using any credit card can also offer the added benefit of purchase protection in the form of Section 75 of the Consumer Credit Act. Under this law credit card providers are equally liable with retailers if anything goes wrong with your goods or services. This is for any item or service where you have used your credit card to pay for something worth from £100 up to £30,000. It could mean you could claim back the money from your credit card provider if the company you bought from goes bust, for example.

4. You want to clear existing debt but continue to spend

You might have existing card debts that you want to switch to a cheaper card or one with a 0% interest rate for transferred balances – but you also need the card for continued spending. In this case you should look for a balance transfer and purchase credit card.

The best deals will offer 0% interest for a set period for any transferred card balances and also for new purchases. Although the time frame for each might be different. For example, you might be able to get 24 months interest-free borrowing for balance transfers but only 18 months on new spending. When comparing deals try to find the card with the longest 0% interest period for both. Read the small print to be sure you know the details of your card deal before you apply. There may also be a one-off fee, such as 2% or 3% for balance transfers.

5. Cashback or rewards would be an attractive benefit 

reward credit card or cashback card can give you access to a number of useful benefits and incentives as part of your credit agreement. For example:

  • A shopping or store credit card can offer vouchers or in-store points for your favourite shops when you spend on the card

  • An airline credit card can get you airmiles that you can put towards flights as well as access to airport lounges, hotels and car hire, for example

  • A cashback credit card can give you cash for certain spending on the card 

It is important to note that rewards and cashback cards can often charge a monthly or annual fee. They also tend to have a high standard APR or interest rate – this is the rate you’ll be charged if you don’t clear your balance in full each month. It means that to make the benefits and rewards really add up you’ll need to be sure they will outweigh any interest or charges you might pay on the card.

6. You want a cheap card to use on holiday

Most credit cards apply foreign usage charges which can add considerably to the cost of using your card abroad. But with a travel credit card these fees are lower – or in some cases there is no fee for overseas use, meaning they can be a cost-effective way to manage your holiday spending.

For example, using an overseas credit card can mean you don’t need to carry as much cash around with you, and you don’t have to worry about running out of money while you’re abroad. However, you should still be wary of exceeding your credit limit or making late payments, as this will still result in a fee. 

7. You need emergency cash to pay a bill or other debts

If you need a short-term cash loan a money transfer credit card could help plug the gap. They work in a similar way to balance transfer credit cards, but instead of transferring an existing credit card balance you can transfer money from the money transfer card directly into your bank account. This money can then be used to pay an emergency bill, for example, or pay off an overdraft or other expensive debt.

The main benefit is that money transfer cards tend to come with a low or even 0% interest rate for a set period – so it could essentially be a short-term interest free loan. Remember you’ll still need to repay the minimum monthly repayment required on the card, and after the low or 0% interest period ends the interest rate will usually increase to a much higher rate. So aim to pay off the debt before the offer period ends.

Our expert says...

“Be disciplined. Pick the right credit card for your specific needs, stick to using it for those needs and only those, make your repayments on time and a credit card can be a useful, even empowering tool in your financial arsenal. But take your eye off the ball, and you could find yourself paying over the odds for the privilege of the plastic in your wallet. My tip? Don’t link it to your phone for contactless payments!”

- Kate Hughes

Other useful guides

For more detailed information about credit cards, see our guides, including:

Getting your first credit card

How to apply for a credit card

How long does it take to apply for a card?

Find the best credit card for your needs with MoneySuperMarket

Searching and comparing credit card deals of all types is quick and simple with us. Just give us some information about your personal finances and what you’re looking for and we’ll do the leg work for you – finding the best cards to suit your needs from across the market.

We’ll show you your chances of being accepted for each card deal – so you can apply with greater confidence. And searching won’t affect your credit score in any way.

Once you’ve found the card you want, just click through to the provider to finalise your application. 

MoneySuperMarket is a credit broker – this means we’ll show you products offered by lenders. We never take a fee from customers for this service. Instead we are usually paid a fee by the lenders, but the size of that payment doesn’t affect how we show products to customers.

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