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The best credit card for you will depend on what you want to use it for. For example, whether you want to pay down debt, improve your credit rating, spread the cost of a large purchase, spend overseas, or earn cashback.
- 0% credit cards offer zero interest on purchases, balance transfers, or both, for a set number of months.
- Mainstream credit cards are expensive to use abroad – a travel credit card will save you money on every trip.
- Having a poor credit rating doesn’t mean being rejected for all credit cards. The right card can improve your credit score.
Which credit card is best for you and your finances?
The credit card if you have bad credit
You need a credit building credit card if you have a poor credit history and are likely to be rejected for a mainstream card.
This type of card can improve your credit score. Borrowing money on this type of card and paying off your full balance each month will boost your score.
What to watch out for: Credit building cards carry very high interest rates — typically 29% to 35% APR — so NEVER spend more than you can afford to pay back. And ALWAYS make repayments on time.
These cards might also be called:
- poor credit credit cards
- bad credit credit cards
- credit building credit cards
The credit card if you want to spread the cost of a large purchase
You need a 0% purchase card if you want to spend without having any interest added, but you don’t want to pay off your balance in full each month.
With a 0% purchase card you’ll pay 0% interest for a set amount of time (typically three to 24 months). This doesn’t mean you don’t have to make any repayments – you still need to pay at least the minimum payment each month.
What to watch out for: Failing to pay the minimum payment each month can result in the 0% deal being cancelled. Also, make sure you clear the balance before the 0% period runs out, as the standard interest rate on these cards can be high.
These cards can also be called:
- 0% purchase card
- purchase credit card
- 0% credit card
The credit card if you want to pay down existing credit card debt
You need a 0% balance transfer card if you have an existing credit card debt with interest and want to pay if off quicker.
Moving an outstanding debt from one credit card to another is known as a “balance transfer”. Balance transfers mean you can benefit from a cheaper interest rate on an existing debt.
The best balance transfer cards charge 0% interest for a set amount of time (three to 24 months).
This means your debt will not have any interest during this period. But, you still need to pay at least the minimum payment each month and 100% of what you pay will go towards reducing your debt, not paying interest.
What to watch out for: Most balance transfer cards charge a fee when you shift a debt to the card. This is called the “balance transfer fee” or BT fee. It’s normally 2 to 3% of the amount transferred.
This card can be called:
- balance transfer credit card
- 0% balance transfer credit card
The credit card if you want to spend AND pay down credit card debt
You need an all-rounder card if you have existing credit card debt to pay off, but you also want to spend.
All-rounder cards offer 0% interest on both purchases and balance transfers.
The 0% deals might be for the same number of months on both, or there might be different length 0% deals for purchases and balance transfers.
What to watch out for: This type of card may charge a balance transfer fee. You should also make a note of when each 0% deal will end.
This card might also be called
- 0% purchase and balance transfer credit card
- 0% credit cards
- all round credit cards
- balance & purchase
The credit card if you want to get cash into your bank account
You need a 0% money transfer credit card if you want to get cash into your bank account. This could be to pay off an overdraft or loan with a high interest rate.
Money transfer cards work in a similar way to balance transfer cards, but having the money go into your bank account means you have the flexibility to pay off debt from an overdraft or loan.
Money transfer cards will often offer a 0% period but will usually come with a transfer fee of around 4%. At the end of the offer, the lender will start charging you interest.
Make sure you’re aware of the fees involved, and even if the offer is 0%, you’ll still need to be making at least the minimum monthly repayment. If you fall behind, the lender may start charging you interest, and it could damage your credit score.
If you’re unable to clear the debt by the end of the 0% period you could consider taking out a balance transfer card, but again, this will come with fees.
What to watch out for: As with all credit cards, make sure you don’t use your money transfer card to withdraw cash, as this will trigger extra fees. If you need the cash in your bank account, you can ask the lender to transfer the money to your bank account when applying.
The credit card if you want to earn cash each time you spend
You need a cashback credit card if you want to be paid to use it.
Cashback cards pay you back a percentage of what you spend. Rates vary, but 1% cashback is typical. For example, if you spent £1,000 and received 1% cashback, you’d get £10.
What to watch out for: Cashback cards tend to come with relatively high APRs so you’ll only benefit from the cashback if you repay your debt in full each month. Otherwise, the interest you pay is likely to be bigger than the cashback you get.
The credit card if you want to be rewarded for your loyalty
You need a reward card if you want to be rewarded for your loyalty to certain brands or retailers.
Rewards might be:
- vouchers to use in-store or online
- loyalty points to spend or convert into cash
- Air Miles
What to watch out for: Some reward cards come with high APRs so you’ll only benefit if you repay your debt in full each month.
If you want to use your card overseas
You need a travel credit card if you don’t want to pay extra for using your card abroad.
Most credit cards charge you, non-sterling transaction fees (this is to convert your money into the local currency), and ATM withdrawal fees if you use them abroad.
But travel credit cards don’t charge these fees.
What to watch out for: If an overseas retailer asks if you want to pay in pounds or the local currency, always opt for the local currency. If you choose pounds, the retailer does the currency conversion. But if you choose local currency, your card provider will do the currency conversion and this will almost always be the better rate.
Next steps in getting your credit card
1. Decide which type of credit card will be best for you
Read the above card descriptions to decide which type of credit card you need.
Some cards will fall into more than one category. For example, some reward cards also offer 0% interest on purchases or balance transfers or both.
Choosing the right card means you can save money in interest, earn rewards or get cashback. Plus, checking your eligibility beforehand means you can apply for a card you’re likely to be accepted for. may help you get accepted.
2. Check your credit report
When you apply for a credit card, the bank or lender will run a credit check to see if you’re a suitable candidate.
The better your credit score, the higher your chances are of being accepted for the best deals.
You can check your credit score here. Checking your credit history will also give you the chance to correct any mistakes. Doing this means lenders will see a fair representation of your credit history and can make a decision about whether to lend to you based on information that is accurate and up-to-date.
3. Check your eligibility
Our eligibility checker can help you decide which card to apply for. Enter a few details and we’ll show you the cards you’re more likely to be approved for – and those that you have a lower chance of being accepted for.
Acceptance isn’t guaranteed, but we use a soft credit search. That means you’ll see it on your file, but lenders don’t, so there’s no impact on your credit rating.
4. What have you been offered?
Credit card providers are only required to give advertised rates to 51% of successful applicants.
This means that the other 49% may find that the card they have applied for has a higher interest rate (APR) than that advertised.
If you are offered a higher interest rate you don’t have to accept it. You might be better off shopping around to see what other providers are offering.
5. Fill in the application
Once you’ve decided which card you want to apply for, you need to fill in the application form.
You can do this on TotallyMoney after you’ve checked your eligibility.
But, be aware that some of the best deals are offered online only and some providers won’t have physical branches.
If your application is successful, your card should arrive within two weeks.