The dos and don’ts of using a credit card

Ask someone what they think of credit cards and they’ll probably tell you one of two things. They’ll either recommend credit cards as an indispensable, convenient way to pay for things or they’ll tell you to steer well clear.


For better or worse, many people have their own experiences with credit cards. Bad experiences can often come down to a simple lack of understanding of how best to use them and how to pay them off.

So, we thought we’d compile a list of credit card ‘dos and don’ts’ to help new or inexperienced credit card users to make sure they manage their cards wisely.

DO: Shop around for the best deal

This should be a no-brainer because you don’t want to be paying more than necessary for anything, especially credit cards.

The lower the rate a credit card has, the less any debt carried on the card will cost you. Rates are expressed as representative annual percentage rate (APRs).

‘Representative’ is a key word here; all it really means is that the advertised rate has to be offered to at least 51% of successful applicants. In practice, this means that if you’re accepted for a card, you won’t necessarily get its headline rate.

The best rates and deals go to those with the best credit ratings, as they’ve proven themselves to be responsible borrowers. Applying for a card and getting rejected can be bad for your credit rating, which leads us to our first ‘don’t’…

You can compare credit card rates on our credit cards channel.

DON'T: Make too many applications

Getting rejected for several cards in a short space of time can be damaging to your credit score, because potential lenders will see it as a warning signal.

Each time you apply, your credit history is checked by the lender – who will see the recent rejections, which will limit your chance of being accepted. Luckily there are some things you can do about it.

DO: Check your credit file

For a fee of around £2, you can get a statutory copy of your credit file from agencies like Experian of Equifax. You’ll see how good or bad your credit score is and you can check it for any errors which might be bringing your score down.

If you spot any errors, contact the creditor and explain the situation to them. If you are right, the error will be corrected under a Notice of Correction and your score should go up accordingly.

You can compare credit reference agencies here.

DO: Use our Eligibility Checker tool

One way to get around the ‘too many applications’ problem is to use our Eligibility Checker tool, which tells you how likely you are to be accepted for a card without actually applying.

It’s called a ‘soft search’ because it doesn’t leave any record on your credit file for other potential lenders to see. You’ll get a score out of 10 based on how likely it is you’ll be accepted, allowing you to apply only for the card’s you’re most likely to be accepted for.

Try the Eligibility Checker tool for yourself here.

DON'T: Just pay the minimum

This is perhaps the biggest DON’T for all credit card users. Just paying the bare minimum off the card each month can have the debt hanging over your head for months and even years!

For example, if you spent £1,000 on a credit card with a representative APR of 17.32% (the market average, according to Bank of England figures), and you paid the minimum each month (usually the greater of £5 or 2% of the balance,) it’d take 23 years and nine months to clear the balance!

What’s more, you’d pay back £1,630, just in interest.

DON'T: Miss payments

While we’re on payments – make sure you never miss one. Late payment can earn you fines from the card issuer and damage your credit rating.

It’s simple to set up a direct debit which will automatically pay the credit card bill each month and it means you’ll never miss a payment.

DO: Take advantage of balance transfer deals

If you’re having a hard time paying down the balance on your credit card, transferring the debt to another card with a 0% balance transfer offer could help – although you will need to pay a typical transfer fee of 3%.

This means you can start chipping away at the capital, rather than just paying the minimum interest on your existing card.

The best balance transfer deal on the market is currently Barclaycard Platinum card with Extended Balance Transfer. For a balance transfer fee of 2.9%, this offers 22 months of 0% interest on balance transfers as well as three months’ 0% on purchases.

Again, the best balance transfer deals go to customers with the best credit ratings, but you can use our Eligibility Checker tool to see which you’d be likely to be accepted for.

There are occasionally good deals on offer to people whose credit scores are less perfect. For example, the Capital One Balance card is offering customers with ‘average to good’ credit scores 0% on balance transfers until August 2012.

DO: Make a note of when these offers end!

If you’ve signed up for a card with a promotional interest-free period, make some sort of note of when it ends because the rate will shoot up thereafter.

For example, after August, the Capital One Balance card rate will rocket to a typical APR of 34.94% (variable), so you definitely don’t want to get caught out.

Stick the end date in your diary, on a post-it note on the fridge or make it a reminder on your phone – whatever it takes. Just make sure you don’t miss the date.

DO: Enjoy credit card benefits

One of the big advantages of paying with a credit card is the security they afford you. Thanks to the Consumer Credit Act and the more recent Consumer Credit Directive, anything you buy on a credit card worth between £100 and £60,260 is protected.

If, for example, you bought a sofa from an online retailer who subsequently went bust and disappeared from the web before you got your new couch, the credit card issuer would be jointly liable with the merchant for the purchase and you’d get your money back.

The protection applies for the full amount, even if you just paid for the deposit on your credit card.

DON'T: Get caught out by charges

Credit cards are certainly convenient, but that convenience sometimes comes at a premium.

For example, if you use a credit card to withdraw cash from a hole in the wall, you’ll be charged a fee of around 25%.

Look out also for credit cards that charge an annual fee for simply holding the card and for websites which charge a fee when you pay using a credit card.

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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