How to choose a credit card

Making a big purchase

Let’s say you want to book a holiday or buy some new furniture.

With a credit card you can spread the cost over a longer period, rather than paying for it upfront.

Some purchase credit cards off 0% on purchases for as long as 16 months.

If you wanted to, you could spread the cost over 16 instalments and not pay anything more than the face value of the holiday or furniture.

But remember: if you still have a balance left on the card when the 0% period ends, you’ll start being charged interest at a higher rate.

Transferring a balance

If you already have a balance on a credit card that you’re trying to pay down, you might be able to clear it faster with a balance transfer card.

Some balance transfer credit cards offer 0% on balance transfers for up to 22 months.

This means if you transfer a balance of £1,000 from your old card to a 0% balance transfer card, the balance won’t accrue any interest for 22 months – giving you some breathing room to pay it down.

Again you’ll have to clear the balance by the end of the 0% period, or start paying interest on it.

Earning rewards

If you want to get something back for your spending, there are credit cards which give you cashback or reward points when you use them.

You can get up to 5% cashback with some cards, while others reward you for spending on energy bills, fuel, in supermarkets and in department stores.

Building/repairing your credit score

If you handled credit badly in the past, you might have a low credit score.

Having a low credit score can make it harder to be accepted for things like loans, mortgages and credit cards

Some cards are specifically designed for people with low credit scores, and if you use them properly you can start improving your score.

But be warned – these cards usually come with higher rates of interest than mainstream credit cards.

If you’re going to use one – you MUST make sure you clear your balance each month and pay your bill on time.

So there you go – if you’re making purchases, transferring a balance, building your credit score or wanting to earn rewards, those are your options.