Approval for any credit card will depend on your status. The representative APRs shown represent the interest rate offered to most successful applicants. Depending on your personal circumstances the APR you're offered may be higher, or you may not be offered credit at all. Fees and rates are subject to change without notice. It's always wise to check the terms of any deal before you borrow.
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Feast your eyes on these fantastic plastic balance transfer rates, cashback offers, travel perks and rewards in our UK credit card comparison.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
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How do credit cards work?
A credit card allows you to make purchases on credit that you can settle at a later date. At the end of every month, you’ll receive a statement that outlines your spending for the previous month. You can choose to pay off the entire outstanding balance or make the minimum monthly payment, which typically amounts to 2-3% of the balance owed.
Unlike a loan, which comes with a predetermined repayment plan and a fixed end date, credit cards offer flexibility and are open-ended. You have access to credit when you need it, and you can settle your debt as quickly or slowly (within reason) as you choose.
High-street banks and building societies tend to be the first place people consider for a credit card, but they’re also available from supermarkets (including Tesco and Sainsbury’s) airlines (like British Airways and Virgin Atlantic) and dedicated credit card issuers (like Aqua or mbna).
Credit card jargon explained
- APR. The annual percentage rate (APR) serves as a reference point for consumers and provides an annual overview of the expenses associated with your credit card. In addition to the interest rate, the APR includes any mandatory fees, such as an account fee (if applicable). However, crucially, providers only have to award the advertised APR to 51% of those who take out the credit card – the other 49% could be offered a different (higher) rate, at the provider’s discretion. That’s why it’s often referred to as the representative APR.
- Eligibility criteria. A list of conditions that a borrower must meet in order to be considered for credit. These vary from lender to lender.
- Fixed rate. A fixed interest rate remains constant for a predetermined period, even if there are any fluctuations in interest rates. For some borrowers, this can be a preferred option since it provides a greater degree of financial certainty when it comes to budgeting.
- Credit card balance. This refers to the amount of credit you have currently used, and need to repay. Most credit cards have a monthly balance cycle, which means you’ll be charged interest if you don’t pay off your balance each month.
- Variable rate. A variable rate is the opposite of a fixed rate and can increase or decrease over time at the lender’s discretion. Typically, variations occur as market conditions generally shift – for example, an increase or decrease in the Bank of England base rate.
- Assumed credit limit. Lenders use an example credit limit of £1,200 in their representative examples to help you compare credit products more easily. All financial products providing credit have to clearly show a representative example in promotional material.
- Charge card.Charge cards are similar to standard credit cards, but with one or two significant exceptions. For example, charge cards usually have a larger spending limit and require you to pay your full balance off by the statement due date, which is usually the end of the month. With credit cards, you only have to repay a small portion of the balance each month.
Why should I get a credit card?
There are plenty of situations when a credit card could be a smart choice. For starters, used carefully, they can be a cheap – or even free – way to borrow. But even if you don’t need to borrow money, there are other benefits you may want to consider.
Crucially, card issuers are jointly liable with the retailer if you don’t get what you paid for – so if your purchase (up to the tune of £30,000) isn’t as described, or if the retailer goes bust and takes your money with it, you may be able to get a refund through your card issuer.
If you are a young person or have a limited credit history, you may not have much of a credit record. If you plan to take out a mortgage or car finance in the future, it is crucial to demonstrate your ability to borrow money and repay it on time in order to secure favorable interest rates. One way to establish this is by using a credit card.
But even if you have excellent credit and you don’t need to borrow, a credit card could still work for you. Plenty of cards come with perks or rewards – from loyalty points or cashback through to airport lounge access or travel insurance.
Best ways to use a credit card
Some of the best ways to use a credit card are outlined below:
- Build up your credit score
If you don’t have much of a credit history because you’ve never borrowed before or your credit score is low, a credit card can be a good first step to improving it. Credit building cards are designed specifically for those with a poor credit history in mind. Be aware that many of these credit cards come with higher interest rates compared to standard cards, so it’s important to pay off your balance in full each month.
- Get cashback and rewards
Many credit cards offer competitive cashback rates or rewards, helping you to earn something back as you spend. However, the downside is that many of these cards come with high interest rates and those cards that offer exclusive rewards (e.g. lounge access) might charge an account fee.
- Save interest on existing debt
If you’re currently paying interest on existing credit card or store card debt, it’s worth shifting that debt to a 0% balance transfer credit card. Doing so will mean you’ll avoid paying interest for a number of months – almost 3 years in the best cases – giving you time to tackle your debt head on without worrying about interest building up. Be aware you might have to pay a transfer fee.
- Spread the cost of a purchase
If you’re planning a large purchase, such as a holiday or new car, a 0% purchase credit card lets you spread the cost of your spending interest-free over several months. This can be much cheaper than other methods of borrowing, but only if you’re confident you can pay off your balance in full before the 0% deal ends.
- Protection on your spending
Another great benefit of using a credit card is that you’ll get purchase protection. Section 75 of the Consumer Credit Act applies to credit card purchases of over £100 and up to £30,000. Purchase protection means your card provider is jointly liable with the retailer if you don’t get what you paid for.
How to choose the right credit card
- Work out what you want to get out of your credit card. Do you want rewards, cashback, interest-free periods on purchases or to transfer an existing balance?
- Find the providers that offer that type of credit card. Some credit card providers specialise in certain type of cards, and may not offer other types.
- Compare credit cards to find the one that best meets your needs. You should consider things like rate, fees and features.
- Check your eligibility to make sure you qualify for the card.
What type of credit card should I get?
To find the best credit card to suit your wants and needs, it’s good to wise up on the types of credit cards on the market. Here are some of the main type of credit cards available in the UK, along with the key benefits they offer.
Balance transfer cards
These cards let you transfer existing debt and enjoy a low (or 0%) interest rate on it for a promotional period. If you already have a credit card or loan debt, a balance transfer card could help you get debt-free faster and/or more cheaply.
These cards reward you for every purchase you make, either in cashback (account credit) or in points to redeem with participating merchants. They can also offer a world of perks but tend to be less-suited to ongoing borrowing.
0% purchase cards
These cards don’t charge any interest on purchases for a set amount of time. If you’re anticipating a hefty expenditure, a 0% purchase card could let you spread the cost without having to pay any extra for the privilege.
Overseas spending cards
If you’re heading overseas or you’re planning to make non-sterling transactions, these cards can offer fee-free currency conversions (most credit cards charge you for this).
Credit builder cards
These cards are designed for those with damaged or very limited credit records. Rates are typically a bit higher and credit limits a bit lower, but it’s usually easier to get your application across the line.
Used carefully, these cards can offer a small financial buffer and can help kick-start a positive credit record. They’re generally available alongside your student current account.
Frequent flyer cards
These cards are affiliated with a specific airline so they’re best for loyal customers. You’ll earn points/miles on all your day-to-day spending to redeem against flights, companion tickets, upgrades and more.
Who can get a credit card?
There are credit cards to suit almost anybody, but you’ll need to be 18 or older and a UK resident.
Credit cards are offered at the issuer’s discretion – in other words, when you apply for one, the card issuer will weigh up your application, and if it thinks you’re a safe bet, it’ll offer you a card. Card issuers normally state their minimum criteria (which could include a minimum income or being an existing customer) but meeting these criteria isn’t a guarantee of approval.
For really premium cards, you’re likely to need a decent income and a good track record of borrowing responsibly (a high credit score), but credit builder credit cards and student credit cards are much easier to get approved for. If you’re not sure what your credit score is and what’s in your credit report, you can find out free with Finder.
How much will I be able to spend on a credit card?
If your credit card application is approved, your specific circumstances will determine what credit limit (that’s the maximum debt you can build up on the card) the issuer will offer you. Your personalised limit will depend on factors like your credit score, and your income and outgoings.
Once you’ve held a credit card for a few months or years, you might want to raise a request to increase your credit limit. Any increase will be at the card issuer’s discretion, but if you’ve been using your card sensibly (making repayments on time) and your circumstances haven’t changed for the worse, there’s a reasonable chance your request will be approved. Some card issuers will even pro-actively suggest a credit limit increase after a while.
What will a credit card cost me?
One of the downsides of credit cards is that the fee structure can be a bit fiddly. But do your homework and use them correctly, and credit cards can be the cheapest form of borrowing going (or can even earn you benefits while not costing you a penny).
- Monthly repayments. You’re free to repay as much as you like as often as you like, subject to a small monthly minimum that’ll be outlined when your statement is issued – usually about 2% of your outstanding balance. You’ll pay a late payment fee (and damage your credit score) if you don’t make the minimum repayment by the statement due date. If you clear your full balance each month, your purchases generally won’t incur any interest – it’s when you carry a balance from month to month that the interest kicks in.
- Annual/monthly account fee. Most cards don’t come with an account fee attached, but more premium options (generally high-paying rewards cards) can do. The credit card annual fee is deducted from your available credit and accrues interest at the purchase rate if it isn’t paid in the first statement period.
- Interest rates. Interest is the price you pay to borrow money, but confusingly with credit cards, different parts of your balance can incur different interest rates. Most commonly, non-sterling transactions and cash advances (withdrawing cash using the card) may have a designated interest rate that’s higher than your card’s standard purchases rate.
- Cash advance fees. Withdrawing cash on a credit card is usually a bad idea. There’s normally a one-off fee and a higher rate of interest. These extra fees can also apply to “cash-like” transactions – for example any spending at a casino, or buying foreign currency.
- Non-sterling transaction fees. Any spending in currencies other than Sterling will usually involve a currency conversion fee (unless you’ve opted for a designated overseas spending card). Plus, this part of your balance could be charged interest at a different (higher) rate.
- Other fees. There are a few other fees that issuers can charge – for example, additional card fees (when you request an additional card for a partner or family member), balance transfer fees (when you move existing debt across to your new card), money transfer fees (when you transfer money from your card to your current account) or fees for misuse, like going over your credit limit or failing to make a repayment by the scheduled date.
Credit card cost comparison
Credit card limit: £1,000
- Outstanding balance: £800
- Interest rate: 19.9%
- Monthly repayment: £25
- Total interest: £305
Credit card limit: £1,000
- Outstanding balance: £800
- Interest rate: 29.3%
- Monthly repayment: £25
- Total interest: £577
MUST READ: Credit card grace periods
Almost all credit cards come with up to 55 or 56 interest-free days each billing period. To take advantage of this facility though, you’ll need to clear your balance in full each month. It’s only applicable on new purchases and, in most cases, not available on cash advances or balance transfers.
Here’s how it works: Let’s say you make a £100 purchase on the first day of the month, then at the end of the month you’re sent a bill and asked to pay by the 25th of the next month. Provided you clear your full balance, you could have enjoyed 55 or 56 days of interest-free credit on that purchase. However, if you only pay the minimum required payment, you’ll be charged interest on the purchase from the day you made it.
If you set up a direct debit to clear your full balance each month (yep, this is possible – and very normal) then you can relax in the knowledge that you should avoid interest altogether. Just make sure you have the necessary funds in your nominated account to cover the direct debit.
What do I need to know before I apply?
Once you’ve established what type of card you need, you can use Finder comparison tables to see the deals available.
The representative APR can be a helpful figure to use when comparing cards from different issuers – it’s a standardised figure that’s designed to illustrate the annual cost of using a card. However, the vast majority of card issuers tailor rates to the individual. They have to give their advertised “representative APR” to at least 51% of their customers, but the other 49% could be offered a higher rate. Typically, it’s the applicants that the issuer deems to be the safest bets that’ll be awarded the representative APR – based on factors like credit scores and affordability.
You can get a better idea of the rates that you’d be offered by using a soft-search facility e.g. an eligibility calculator. These involve a short form that banks or brokers use in order to be able to check your credit file without affecting your score. In return, you get a more accurate idea of whether or not you’ll get approved for a card plus the rate that you could be offered.
Learn more about specific card features
- Finder survey November 2020
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