Is a credit card right for me?

With an interest-free credit card, you can purchase goods or services and spread the cost over time.

For example, a 0% purchase credit card that doesn’t charge interest for 25 months, gives you more than two years to pay off your card debt at no added cost provided you meet the minimum repayment each month.

Credit cards offer protection for purchases costing more than £100 and up to £30,000 under Section 75 of the Consumer Credit Act.  
 
This means the credit card provider can be held jointly liable with the retailer if something goes wrong, such as the goods not arriving, being faulty or the company going out of business, giving you an added layer of protection when you shop.

A credit card can be a stepping stone to a better credit rating and lower interest deals when you want to borrow in the future. By using your card responsibly, you demonstrate to lenders your ability to manage credit.

For those with poor credit histories, there are even credit builder credit cards specifically designed to help improve your score.

It's worth noting that managing your credit limit on any form of credit card is also good for your credit rating, so the benefits aren't just for those using credit builder products.

A balance transfer credit card can help you clear your existing credit card debt more effectively.  
 
You move the balance to the new card with an interest-free period, avoiding the high interest charges of your previous credit card. Just note the transfer fee, which can be around 3% of the balance you're moving.

Likewise, if you're paying interest on an overdraft, a money transfer credit card gives you the chance to clear the debt and then pay off the card balance at a lower rate of interest.

If you want to be rewarded for your everyday spending, there are credit cards that offer incentives such as cashback, points you can redeem at retailers and air miles.

Be aware of high interest rates and annual fees that some cards charge, and confident that the rewards will outweigh any charges. If you’re not confident you can clear your balance in full every month, this type of card probably isn't for you.

A travel credit card will offer no, or low, foreign transaction fees and more favourable exchange rates, which can be great when you want to spend abroad.

Travel cards rarely cover every hidden charge though, so it’s still best to adopt good financial habits such as paying in the local currency and not using your credit card to withdraw cash from an ATM.

• If you have bad credit or no credit history, a credit builder card could help you build up your credit score

• If you’re looking to spread the cost of planned purchases, a 0% purchase credit card can be a cheap way of borrowing

• If you want to earn rewards, some credit cards offer cashback, air miles, or freebies like insurance

• If you want to move high-interest debt from another credit card, a balance transfer card can help, often with a 0% introductory period 

• If you want to keep fees to a minimum while abroad, a specialist travel credit card could be an option, as well as providing protection for purchases

The key is to decide what features you need from a credit card before you begin your search.

Credit cards are generally safe to use, thanks to protections like Section 75 of the Consumer Credit Act, which covers purchases from £100 to £30,000.

Debit cards also offer protection through a scheme known as chargeback, but it's not as robust as Section 75.

If you’re worried that you won’t be able to pay off any borrowing or don’t want to get into debt of any kind, relying on a debit card only could be the way to go.

However, credit cards offer more than just the ability to spend. They provide better protection on purchases, can give you rewards and incentives, and the flexibility to make significant purchases quickly and spread costs on 0% interest deals.

Good credit scores result in better eligibility and more favourable rates, so before getting a new credit card, consult your credit report and check for any small improvements you can make.

Simple steps such as being on the electoral roll can give your credit score an easy boost. Our guide to improving your credit rating provides more tips.

Turning 18 opens the door to credit card eligibility, but some providers set the minimum age at 21.

While young people may find it challenging to get approved due to a lack of credit history, specialist credit-builder and student credit cards are available to help you build a credit profile.

APR stands for Annual Percentage Rate. It’s very similar to the interest rate, but also accounts for any annual fees you’re being asked to pay.

When you take out a credit card, you’ll be told the interest rate you’ll pay on any debt if you don’t clear your balance in full each month.

For example, if you borrowed £100 over 12 months and the interest rate was 10%, you’d owe £110 by the end of the year.

It sounds obvious, but credit card companies lend you money and they expect it back.

As such, don't spend more than you can afford to repay, and always note down when promotional interest rates end. Setting up a direct debit can help make sure you don’t miss a payment.

Failing to do so can lead to escalating debt and negatively impact your credit rating.

For larger sums, like home improvements,loansmight work out cheaper in the long run.

The average credit limit offered to MoneySuperMarket customers is £2,800i, so if you need to borrow more than this, an unsecured or secured loan might be more appropriate.

You also need to factor in how much you can afford in monthly repayments. Credit cards work best when you clear the balance each month or during the low or 0% interest rate period. If payments are likely to stretch beyond this, a loan may be a better option.

If you don’t want to get a credit card, but have a short-term cash flow issue, then an authorised overdraft can be a convenient option, depending on the interest rate charged.

Either contact your bank to assess this option or look for a new current account that offers an interest-free overdraft when you sign up.

Another option is a prepaid card, which offers all the ease of paying by plastic and can be great for budgeting and spending overseas. A prepaid card is not a credit card though, so you have to load it with funds before using it.