Benefits and disadvantages of a credit card

Weigh up whether a credit card is right for you with our comprehensive list of 15 pros and cons.

Jump to the benefits Pros
Jump to the disadvantages Cons

9 Benefits of using a credit card

The perks that come with paying on plastic include:

  • 1. A credit card is safer than carrying cash.
    While there’s only a small chance of having lost or stolen cash returned, a credit card can quickly be cancelled if you lose your wallet. Most financial institutions also have security processes in place to protect you if your card has been lost or stolen or if you suspect your account has been used for a fraudulent transaction. If you’re in any of these situations, make sure to contact your bank to report the issue as soon as possible.
  • 2. We’re living in an increasingly cashless society.
    We’re starting to reach that point in our financial history where people are choosing to pay with plastic over paper. More merchants are now accepting a wider variety of cards, such as Amex and business cards, and some are even ditching cash payments altogether.
  • 3. A credit card can build your credit rating.
    Your credit card account details and payment history make up a key part of your credit report. Provided you keep your account in good standing, this information will help you build up a good credit score, increasing your chances of approval for other products such as car loans or a mortgage.
  • 4. You can get interest-free days.
    Provided you pay the balance in full before the statement period ends, many credit cards will offer a set number of days where you won’t pay interest on purchases. That can make a credit card a much smarter prospect than regularly dipping into your overdraft. Other, specialised cards go further – offering 0% interest for a number of months, allowing you to spread the cost of significant purchases.
  • 5. Earn reward points when you spend.
    Rewards and frequent flyer credit cards allow you to earn reward points on every pound you spend on eligible purchases, such as groceries and petrol. Redeem the points with the lender’s rewards programs for perks including flights, products from the rewards store or cashback.
  • 6. You can request a refund if you’re unhappy with a product or service.
    Thanks to Section 75 of the Consumer Credit Act, 1974, you can request a chargeback through your credit card company if your purchase is faulty, not as described, or does not arrive, and the merchant refuses to refund the money or has gone bust.
  • 7. Credit cards work in any currency.
    Although currency conversion fees usually apply, it’s super-easy to use your Visa or Mastercard credit card abroad to make purchases in a foreign currency. There are even tailored credit cards that waive fees for international purchases – which could be useful if you often shop at overseas online stores or have an overseas holiday coming up.
  • 8. Credit cards give you an emergency line of credit.
    Credit cards can be a financial safety net if you don’t have enough cash or savings to cover any unexpected costs that arise. Remember that you have to repay everything you owe, though.
  • 9. Credit cards often have complimentary extras.
    Credit card features such as travel insurance, purchase protection and extended warranty insurance can save you money and give you peace of mind. Other value-adding features include complimentary flight offers, airline lounge passes and even free wine when you dine.
  • 10. You can consolidate debts and save money on existing balances.
    Balance transfer credit cards allow you to move existing high-interest debts to a new account with a low or 0% promotional interest rate. This can save you money on interest charges and help you clear debt faster.

It’s also worth noting that, until recently, businesses often applied a surcharge when you paid with a credit card. Thankfully this is no longer allowed, so you won’t be charged extra when using your card.

6 Disadvantages of using a credit card

The downsides of spending with a credit card include:

  • 1. Paying high rates of interest.
    If you carry a balance from month-to-month, then depending on the card you’ll be charged interest. The default interest rates can be painfully high, and can vary depending on the type of transaction (cash advances or transfers to other accounts, for example, are often charged at a higher rate than purchases) so you can end up paying hundreds or thousands more than you might have, if you only make the minimum required repayment each month. Like your home energy, mobile contract and mortgage, if you don’t keep your eye on the ball and compare and switch from time to time, you’re likely to spend much more than you need to.
  • 2. Credit damage.
    Missed credit card repayments and ongoing debts are recorded on your credit file and can impact your chances of getting a loan in the future.
  • 3. Credit card fraud.
    There are a range of fraud schemes that target credit cards. While you can be compensated for illegal transactions on your account, dealing with credit card fraud can still be a time-consuming and stressful experience.
  • 4. Cash advance fees and rates.
    Financial institutions make it very expensive to use your credit card to get cash out or make other “cash equivalent” transactions (such as buying foreign currency). Using a credit card for a cash withdrawal will attract a cash advance fee worth around 3% of the total transaction amount. It also typically attracts an interest rate of 18-22% right away.
  • 5. Annual fees.
    While you can often get cards without annual fees, many credit cards do have them. These can cost as little as £25 per year, or several hundred pounds, depending on the card that you choose. Generally, the more perks you want, the higher the cost of the annual fee. If you want to avoid this charge, you can consider a no annual fee credit card – but make sure you look at all the other features to help find a card that works for you.
  • 6. Other fees can quickly add up.
    Depending on your card, you could be charged fees when you miss a payment, fees if you spend past your credit limit, fees for overseas transactions, balance transfer fees and even some rewards programmes fees. If you carry a balance or don’t have access to interest-free days, there’s also a good chance interest will be applied to these charges.

Crucially, credit cards are a “revolving line of credit”. That means they can theoretically last a lifetime, because they don’t have an end date. Taking out a credit card is an ongoing commitment, so it’s worth doing a little homework before diving in.

Should I apply for a credit card?

blondy-with-laptop-holding-a-creditcard copy

Credit cards are suited to certain types of people, and certain circumstances, but not others. As well as considering the pros and cons, you may like to look at the following factors to help decide if a credit card is right for you.

A credit card may suit you if you

  • Are at least 18 years of age
  • Are a UK resident
  • Have a regular source of income
  • Regularly pay your bills on time
  • Want to keep certain transactions separate from your everyday bank account
  • Want to build your credit history
  • Are keen to earn rewards for your spending
  • Need a more flexible cashflow
  • Can afford to pay a little extra for the convenience

A credit card may not suit you if you

  • Don’t meet the typical eligibility criteria
  • Often struggle to pay bills on time
  • Don’t have a regular source of income
  • Don’t want the hassle of having to compare and switch from time to time
  • Can’t afford annual fees or interest charges
  • Have bad credit
  • Are happy to just use a debit card

Different types of credit cards explained

Compare credit cards

Table: sorted by representative APR, promoted deals first
Name Product Purchases Annual/monthly fees Initial credit limits Representative APR Incentive Link
M&S Bank Credit Card Rewards Offer Mastercard
0% for 12 months reverting to 19.9%
£0
Min. limit £500, max. limit not specified.
19.9% APR (variable)
Double points on spend in M&S for first year (2 points per £1). Then 1 point per £1 spent with M&S and 1 point per £5 spent elsewhere. Enjoy 55 days interest free, preferential rates plus no cash advance fee when buying M&S travel money with the card.
Representative example: When you spend £1,200 at a purchase rate of 19.9% (variable) p.a., your representative rate is 19.9% APR (variable).
Check eligibility
M&S Bank Shopping Plus Credit Card
0% for 24 months reverting to 21.9%
£0
Min. limit £500, max. limit not specified.
21.9% APR (variable)
Earn 1 point for every £1 spent at Marks and Spencer's and 1 point for every £5 spent elsewhere. 100 points = £1 reward voucher. Points will be converted into reward vouchers 4 times a year.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
M&S Bank Credit Card Transfer Plus Offer Mastercard
0% for 3 months reverting to 21.9%
£0
Min. limit £500, max. limit not specified.
21.9% APR (variable)
1 point per £1 spent with M&S and 1 point per £5 spent elsewhere. Enjoy 55 days interest free, preferential rates plus no cash advance fee when buying M&S travel money with the card.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Santander All in One Credit Card
0% for 23 months reverting to 18.9%
£3 per month
Min. limit £500, max. limit not specified.
24.7% APR (variable)
0.5% cashback on all your eligible purchases, paid monthly into card account. Maximum spend for cashback purposes is limited to credit limit. Terms apply.
Representative example: When you spend £1,200 at a purchase rate of 18.9% (variable) p.a. with a fee of £3 per month, your representative rate is 24.7% APR (variable).
Check eligibility
The American Express Rewards® Credit Card
26%
£0
Min. limit £500, max. limit not specified.
26% APR (variable)
As a new Cardmember, earn 10,000 Membership Rewards® points when you spend £2,000 in your first 3 months of Cardmembership. Earn 1 point for every £1 spent thereafter.
Representative example: When you spend £1,200 at a purchase rate of 26% (variable) p.a., your representative rate is 26% APR (variable).
Check eligibility
British Airways American Express® Credit Card
26%
£0
Min. limit £700, max. limit not specified.
26% APR (variable)
New Cardmember offer: Earn 5,000 bonus Avios when you spend £1,000 in your first 3 months of Cardmembership. Earn 1 Avios for virtually every £1 spent. Spend £12,000 annually and get a travel companion voucher when redeeming Avios for a BA reward flight. Terms Apply
Representative example: When you spend £1,200 at a purchase rate of 26% (variable) p.a., your representative rate is 26% APR (variable).
Check eligibility
American Express® Platinum Cashback Everyday Credit Card
26%
£0
Min. limit £700, max. limit not specified.
26% APR (variable)
New cardmember offer: Get 5% cashback on your purchases (up to £100) for the first three months of Cardmembership. Terms apply. Spend £0 to £10,000 and receive 0.5% cashback on all purchases. Spend over £10,000 and receive 1% cashback on purchases.
Representative example: When you spend £1,200 at a purchase rate of 26% (variable) p.a., your representative rate is 26% APR (variable).
Check eligibility
Royal Bank of Scotland Reward Credit Card (existing customers only)
21.9%
£24 per annum. Reward or Reward Black Current Account holders: £0 per annum
Min. limit £250, max. limit not specified.
26.8% APR (variable)
Earn 1% back at supermarkets and 0.25% back everywhere else, including supermarket petrol stations. At selected retailers, you could earn 1-15% back.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a. with a fee of £24 per annum. Reward or Reward Black Current Account holders: £0 per annum, your representative rate is 26.8% APR (variable).
Check eligibility
NatWest Reward Credit Card (existing customers only)
21.9%
£24 per annum. Reward or Reward Black Current Account holders: £0 per annum
Min. limit £250, max. limit not specified.
26.8% APR (variable)
You'll earn 1% back at supermarkets and 0.25% back everywhere else, including supermarket petrol stations. At selected retailers, you could earn 1-15% back.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a. with a fee of £24 per annum. Reward or Reward Black Current Account holders: £0 per annum, your representative rate is 26.8% APR (variable).
Check eligibility
American Express® Nectar Credit Card
26%
Year 1 - £0, Year 2 onwards - £25 per annum
Min. limit £700, max. limit not specified.
31.3% APR (variable)
Earn 20,000 bonus Nectar points when you spend £2,000 in your first 3 months. Earn a minimum of 3 Nectar points for virtually every £1 spent at Nectar partners, and 2 Nectar points for virtually every £1 spent elsewhere.
Representative example: When you spend £1,200 at a purchase rate of 26% (variable) p.a. with a fee of Year 1 - £0, Year 2 onwards - £25 per annum, your representative rate is 31.3% APR (variable).
Check eligibility
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Name Product Purchases Balance transfers Annual/monthly fees Representative APR Incentive Link
M&S Bank Shopping Plus Credit Card
0% for 24 months reverting to 21.9%
0% for 24 months
(2.9% fee, min £5 fee)
£0
21.9% APR (variable)
Earn 1 point for every £1 spent at Marks and Spencer's and 1 point for every £5 spent elsewhere. 100 points = £1 reward voucher. Points will be converted into reward vouchers 4 times a year.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Santander All in One Credit Card
0% for 23 months reverting to 18.9%
0% for 26 months
(0% fee)
£3 per month
24.7% APR (variable)
0.5% cashback on all your eligible purchases, paid monthly into card account. Maximum spend for cashback purposes is limited to credit limit. Terms apply.
Representative example: When you spend £1,200 at a purchase rate of 18.9% (variable) p.a. with a fee of £3 per month, your representative rate is 24.7% APR (variable).
Check eligibility
Royal Bank of Scotland Purchase & Balance Transfer Credit Card (existing customers only)
0% for 23 months reverting to 21.9%
0% for 23 months
(2.49% fee)
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
NatWest Purchase & Balance Transfer Credit Card (existing customers only)
0% for 23 months reverting to 21.9%
0% for 23 months
(2.49% fee)
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
HSBC Purchase Plus Credit Card
0% for 23 months reverting to 22.9%
0% for 23 months
(2.99% fee)
£0
22.9% APR (variable)
Discounts and exclusive offers for dining experiences, leisure activities and shopping available through HSBC Home and Away.
Representative example: When you spend £1,200 at a purchase rate of 22.9% (variable) p.a., your representative rate is 22.9% APR (variable).
Check eligibility
M&S Bank Credit Card Rewards Offer Mastercard
0% for 12 months reverting to 19.9%
0% for 12 months
(0% fee)
£0
19.9% APR (variable)
Double points on spend in M&S for first year (2 points per £1). Then 1 point per £1 spent with M&S and 1 point per £5 spent elsewhere. Enjoy 55 days interest free, preferential rates plus no cash advance fee when buying M&S travel money with the card.
Representative example: When you spend £1,200 at a purchase rate of 19.9% (variable) p.a., your representative rate is 19.9% APR (variable).
Check eligibility
HSBC Rewards Credit Card
0% for 6 months reverting to 23.9%
0% for 6 months
(2.99% fee)
£0
23.9% APR (variable)
Earn 1 point for every £5 spent on purchases. Bonus 2,500 reward points on anniversary if £10,000 spent in previous year.
Representative example: When you spend £1,200 at a purchase rate of 23.9% (variable) p.a., your representative rate is 23.9% APR (variable).
Check eligibility
Tesco Bank Clubcard Plus Credit Card Mastercard
0% for 24 months reverting to 19.944%
21.814%
(3.99% fee)
£7.99 per month
37.7% APR (variable)
1 point per £4 spent (£4 minimum) in Tesco and 1 point per £8 spent (£8 minimum) outside Tesco, must have available credit to earn points. Card can also be used as a Clubcard to collect standard points at 1 point per £1 spent on shopping and 1 point per £2 spent on fuel. Points are converted to Tesco vouchers which can be used towards shopping or exchanged for Partner Rewards.
Representative example: When you spend £1,200 at a purchase rate of 19.944% (variable) p.a. with a fee of £7.99 per month, your representative rate is 37.7% APR (variable).
Sainsbury's Bank Dual 24 Month Offer Credit Card Mastercard
0% for 24 months reverting to 21.95%
0% for 24 months
(2.88% fee)
£0
21.9% APR (variable)
Earn 3 Nectar points per £1 spent in Sainsbury's and Argos. Earn 1 Nectar point for every £5 spent elsewhere. Earn 500 bonus points each time you spend £35 or more on Sainsbury's shopping with your credit card, up to ten times in your first 2 months, offer available for new customers.
Representative example: When you spend £1,200 at a purchase rate of 21.95% (variable) p.a., your representative rate is 21.9% APR (variable).
MBNA 0% Transfer and Purchase Credit Card
0% for 24 months reverting to 21.94%
0% for 24 months
(2.89% fee)
£0
21.9% APR (variable)
Earn up to 15% cashback on purchases through Smart Rewards at popular retailers.
Representative example: When you spend £1,200 at a purchase rate of 21.94% (variable) p.a., your representative rate is 21.9% APR (variable).
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Name Product Balance transfers Balance transfer fee Purchases Annual/monthly fees Representative APR Incentive Link
M&S Bank Credit Card Rewards Offer Mastercard
0% for 12 months reverting to 19.9%
0%
0% for 12 months reverting to 19.9%
£0
19.9% APR (variable)
Double points on spend in M&S for first year (2 points per £1). Then 1 point per £1 spent with M&S and 1 point per £5 spent elsewhere. Enjoy 55 days interest free, preferential rates plus no cash advance fee when buying M&S travel money with the card.
Representative example: When you spend £1,200 at a purchase rate of 19.9% (variable) p.a., your representative rate is 19.9% APR (variable).
Check eligibility
M&S Bank Shopping Plus Credit Card
0% for 24 months reverting to 21.9%
2.9% fee, min £5
0% for 24 months reverting to 21.9%
£0
21.9% APR (variable)
Earn 1 point for every £1 spent at Marks and Spencer's and 1 point for every £5 spent elsewhere. 100 points = £1 reward voucher. Points will be converted into reward vouchers 4 times a year.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
The NatWest Balance Transfer Credit Card (existing customers only)
0% for 22 months reverting to 21.9%
0%
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
HSBC Balance Transfer Credit Card
0% for 33 months reverting to 21.9%
2.84% (min. £5) for 2 months reverting to 2% (min. £5)
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
Discounts and exclusive offers for dining experiences, leisure activities and shopping available through HSBC Home and Away.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Royal Bank of Scotland Purchase & Balance Transfer Credit Card (existing customers only)
0% for 23 months reverting to 21.9%
2.49%
0% for 23 months reverting to 21.9%
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
NatWest Purchase & Balance Transfer Credit Card (existing customers only)
0% for 23 months reverting to 21.9%
2.49%
0% for 23 months reverting to 21.9%
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Santander Everyday Long Term Balance Transfer Credit Card
0% for 33 months reverting to 21.9%
2.65% (min. £5) for 33 months reverting to 3% (min. £5)
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
Earn up to 15% cashback with your selected Retailer Offers at selected major retailers.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
M&S Bank Credit Card Transfer Plus Offer Mastercard
0% for 32 months reverting to 21.9%
1.99% fee, min £5
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
1 point per £1 spent with M&S and 1 point per £5 spent elsewhere. Enjoy 55 days interest free, preferential rates plus no cash advance fee when buying M&S travel money with the card.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Santander Everyday No Balance Transfer Fee Credit Card
0% for 21 months reverting to 21.9%
0% for 21 months reverting to 3% (min. £5)
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
Earn up to 15% cashback with your selected Retailer Offers at selected major retailers.
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
Royal Bank of Scotland Balance Transfer Credit Card (existing customers only)
0% for 22 months reverting to 21.9%
0%
0% for 3 months reverting to 21.9%
£0
21.9% APR (variable)
Representative example: When you spend £1,200 at a purchase rate of 21.9% (variable) p.a., your representative rate is 21.9% APR (variable).
Check eligibility
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Name Product Annual/monthly fees Initial credit limits Minimum income Representative APR Incentive Link
Tymit Credit Card
£0
Min. limit £500, max. limit £15,000.
Not specified
22.4%
Representative Example: Rep. APR 22.4% (variable). This means for a purchase of £100 at 22.4% spread over 12 months, you'll pay a total of £111.39 (12 payments of £9.28). No annual fee.
Check eligibility
Vanquis Bank Chrome Credit Card
£0
Min. limit £150, max. limit £1,200.
Not specified
29.5%
Representative example: When you spend £250 at a purchase rate of 29.5% (variable) p.a., your representative rate is 29.5% APR (variable).
Check eligibility
thimbl. credit card
£0
Min. limit £150, max. limit £1,200.
Not specified
39.9%
Representative example: When you spend £1,000 at a purchase rate of 39.94% (variable) p.a., your representative rate is 39.9% APR (variable).
Check eligibility
Vanquis Bank Classic Credit Card Visa
£0
Min. limit £150, max. limit £600.
Not specified
39.9%
Representative example: When you spend £1,000 at a purchase rate of 39.94% (variable) p.a., your representative rate is 39.9% APR (variable).
Check eligibility
Vanquis Bank Origin Credit Card
£0
Min. limit £150, max. limit £250.
Not specified
59.9%
Representative example: When you spend £250 at a purchase rate of 59.94% (variable) p.a., your representative rate is 59.9% APR (variable).
Check eligibility
Tesco Bank Foundation Card
£0
Min. limit £100, max. limit not specified.
£5000
27.5%
Collect 1 Tesco Clubcard point per £4 spent (£4 minimum) in Tesco and 1 Clubcard point per £8 spent (£8 minimum) outside Tesco in each purchase transaction.  Must have available credit to collect Clubcard points. Clubcard points are turned into Clubcard vouchers every 3 months or sooner using Faster Vouchers. Clubcard vouchers can be used in Tesco or with Clubcard Reward Partners to get even more value on dining out, hotel stays and travel.
Representative example: When you spend £1,200 at a purchase rate of 27.542% (variable) p.a., your representative rate is 27.5% APR (variable).
The Credit Thing card
£0
Min. limit £200, max. limit £1,500.
Not specified
27.9%
Representative example: When you spend £1,200 at a purchase rate of 27.9% (variable) p.a., your representative rate is 27.9% APR (variable).
TSB Classic Credit Card Mastercard
£0
Min. limit £500, max. limit not specified.
Not specified
27.9%
Representative example: When you spend £1,200 at a purchase rate of 27.95% (variable) p.a., your representative rate is 27.9% APR (variable).
Keebo credit card
Finder Award
Keebo credit card
£0
Min. limit £200, max. limit £5,000.
Not specified
27.98%
Representative example: When you spend £1,200 at a purchase rate of 27.98% (variable) p.a., your representative rate is 27.98% APR (variable).
Bip Credit
£0
Min. limit £250, max. limit not specified.
£5000
29.9%
Representative example: When you spend £1,200 at a purchase rate of 29.95% (variable) p.a., your representative rate is 29.9% APR (variable).
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We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

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