Finding the best ways to borrow Credit cards and store cards

Row of credit cards

A Best Rate credit card can be a cheap and convenient way to borrow

How credit cards work

Credit cards work on a system called 'revolving credit', which means that you have a credit limit (say £1,000) and you can choose to borrow anything between £0 and £1,000 on the card at any one time. Once you've reached your credit limit, you can't spend any more on the card until you've paid some of it off.

For example, if you have reached your credit limit of £1,000 and then make a repayment of £100, the credit card company will knock the £100 off what you owe, taking your balance owed down to £900. As the bank will charge you to borrow money from them, you'll have to pay some monthly interest on the money you've borrowed, which will be added to your balance. So if the balance you owe according to your credit card bill was £1,000, you repay £100 and get charged £20 in interest for the month, the new balance that you owe at the end of the month will be £1,000 - £100 + £20 = £920.

This month you can therefore only spend another £80 on the card as this, added to the remaining balance from last month's spending, would take you up again to your credit limit of £1,000.

Choosing the right credit card

Our free guide Choosing a credit card explains the main types of card and who they're best for. If you're looking for a credit card for borrowing, there are four main types that may be suitable.

0%-on-purchases cards: These charge no interest on new purchases for up to 12 months and can be useful to spread the cost of large purchases over a year, so you could ‘park’ day-to-day spending and use the money to repay more expensive debt. However, you should repay or transfer the balance at the end of the deal or your APR will shoot up.

0% balance transfer cards: These 0% credit card deals are good for consumers with existing debt who are likely to pay off the bill within the 0% period or who are willing to switch at the end of the period.

Long-term low-rate balance transfer cards: These allow you to transfer existing credit card debt to a new card, with a guarantee that the interest rate on that debt won't go up so long as you meet the minimum payment each month. They're suitable for consumers who are unlikely to pay off their card debts within 12-18 months and don’t want to switch cards regularly.

Low standard rate credit cards: Credit cards with a low standard interest rate (a low APR) catch the headlines, but aren't the always the best cards as the interest can change over time. These credit cards can be good for consumers who use them infrequently and who don't always pay off the bill in full. 

More credit card information

Credit cards also offer valuable protection under the section 75 and chargeback rules. For full details, read the Which? guide Your rights when paying by credit card.

For full details of the best credit cards on the market, read Which? credit card reviews.

Store cards

Our recent investigation showed that store cards can be worryingly easy to obtain on the high street and they rarely offer good value for borrowing.

It can be worth taking out a store card to get an in-store discount on purchases, but only if you pay off your bill in full every month. APRs of around 30% are common, making store cards an expensive way to borrow.

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