Compare The UK’s Top Credit Cards

Understanding credit cards

When you pay for something with a credit card, you are borrowing money. Most credit cards come with an interest-free period of up to 56 days, so if you pay off your bill in full each month, a credit card can be a useful addition to your wallet.

8 reasons why you may need a credit card

• Peace of mind: Credit cards come with free additional consumer protection, known as Section 75. If a purchase isn’t as described or simply doesn't turn up, you can turn to your credit card provider for financial compensation as well as the retailer.

• Low cost borrowing: Using the right credit card is one of the cheapest ways to borrow. Whether you want to clear existing debt or build up new debt, you may have multiple options. Find the right card for you with our free comparison service.

• Earn rewards or cashback: Many credit cards reward you for using them, either with money or points. Why shop with cash or a debit card when you could be earning rewards or cashback?

• Savvy travellers use plastic: Not only do you get extra consumer protection with Section 75 when travelling, a credit card can also save you money abroad. When using the right credit card abroad you can get a better exchange rate when compared to cash and without paying any commission.

• Build a good credit report: A good credit score will help you get the best financial rates on mortgages, cars and more. A bad one will stop you getting pretty much anything you can't pay up front for. Start building yours by getting a credit card and using it sensibly.

• Free insurance: Some credit cards come with free purchase protection for a short period after you buy. If an item you bought is lost or stolen within a set time – usually 90 days – you can get your money back subject to satisfying terms and conditions.

• Protect your money: If you lose your wallet full of cash, the chances are you will never see that money again. If you lose your credit card, provided you were careful, you won’t be liable for money spent on it after you lost it. Just make sure you report the loss swiftly and are always careful with your pin number. If the credit card company can prove you were negligent they won’t pay up.

• In some places, it’s the only way to pay: Some places – such as hotels or car rental outlets – will still insist on a credit card when taking payment. This is because with a credit card they get greater assurance that they can recoup any additional costs you run up.

The different types of credit card

Balance transfer

If you want to cut the interest on your existing debts, a balance transfer credit card is for you. With a balance transfer credit card you can move balances you’ve accumulated on other credit cards and enjoy 0% interest for a set period of time.

It’s not completely free, there is a balance transfer fee to pay when you initially move money. Usually the longer the deal is, the higher the balance transfer fee will be. Also be aware that you will pay interest on any money you spend on a balance transfer card. It’s best to keep things simple and have a separate card for spending. Or use a balance transfer and purchases card, see below.

When choosing a balance transfer card work out how long you need the interest free period to be and then consider the balance transfer fee. Our credit comparison service can help you find the right balance transfer card that you’re most likely to be accepted for. Plus, you can calculate which should deliver you the biggest saving.

Purchase

This is the simplest type of credit card. With a purchase card you’ll get a 0% interest period for a set amount of time, allowing you to spend without accruing any interest, even if you don’t pay your balance back in full each month.

If you want to spend money on larger purchases and not pay it back straight away, this is the card for you. Just clear the balance before the 0% period runs out, as the standard interest rate on these cards can be high – find a 0% purchase card

Balance transfer and purchase

If you have built up some credit card debt and still want to spread the cost of big purchases, a combined balance transfer and purchase credit card could be the answer.

For a set period of time, these cards offer a 0% interest period on both debt transferred from other credit cards and new purchases. The drawback is that the 0% periods are shorter than if you just went for a balance transfer card, or just a purchase card.

So, if you have a large amount of debt that you can’t clear within a 0% balance transfer and purchase card offer, consider getting a pure balance transfer card and a separate purchase card.

Cashback

If you clear your credit card balance every month, and have no plans to build up any debt, a cashback credit card is a good option. These cards reward your spending habits by giving you a percentage of your spending back in the form of cash.

Just be aware that these cards often have high interest rates, making them only worth using if you’re going to pay your balance back in full each month. See cashback cards.

Rewards

An alternative option for people who clear their balance each month is a rewards credit card. Rather than paying you back with cash, these cards offer various forms of points in return from using them. These can range from airmiles to supermarket points. Compare rewards credit cards.

Poor credit credit cards

If you have poor credit, a poor credit credit card can help you build your credit rating over time. While they have high interest rates, if you pay your balance in full each month, they can be an effective way of showing lenders you can be trusted. View credit cards for poor credit.

4 Tips to make a credit card work for you

• Set up a direct debit: Never miss a payment. If you do, you’ll face penalty fees, extra interest and the possibility of losing any 0% deal you may have. Combat this by setting up a direct debit for at least the minimum payment to ensure you always pay on time.

• Minimise your applications: Every unsuccessful credit application will leave a mark on your credit report. In the eyes of lenders, having multiple applications on your file makes you appear desperate for credit.

  Our free eligibility checker can help you reduce the number of credit card applications you make. Enter a few details and, without leaving a shadow on your credit record, it will tell you which cards are most likely to accept your application.

• Cancel old cards: If you have any old credit cards that you no longer use, cancel them. When a credit card provider is deciding whether to lend to you, they look at how much credit you already have access to. This includes existing credit card limits and overdrafts. So, eliminate any credit you don’t use.

• Know your deal: Be clear about what your credit card’s interest rate is, the fees it charges and when any introductory deal you may have ends. If you don’t know these details, you risk accidentally paying interest or fees.