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How to find the best credit card

Credit cards aren't just a useful borrowing tool – they can also come with other benefits.

In this article
Why should you get a credit card? What credit card is right for you?
What to consider before you apply Three ways not to use credit cards

Why should you get a credit card?

There are hundreds of credit cards available and if you’re looking to take out your first card, or get a different type, it’s important to consider what will work best for you.

Here are some of the ways you might benefit from a credit card.

Protection under Section 75 and chargeback

If you’re looking to make a purchase of £100 or more,  you may have been told to order this on a credit card. This is because credit cards have additional protection that debit cards do not. 

If you use a credit card to pay in full or partly for goods or services costing between £100 and £30,000, you get valuable protection under section 75 of the Consumer Credit Act.

Even if section 75 doesn't apply, for example, if the total cost of the purchase is less than £100 or more than £30,000, you may be able to put in a claim under the industry-agreed chargeback system.

Protection if you lose your wallet or purse  

If you lose a wallet or purse full of cash, it's unlikely that you'll be able to get it back. However, if you're unfortunate enough to fall victim to card fraud, you have legal protection to ensure you don't lose out financially.

Your bank must refund any fraudulent payments immediately unless it has evidence that there is reason to refuse a refund.

Improve your credit score

If you have a poor or limited credit history, you may struggle to access the best credit deals. But some credit cards are designed specifically to build your credit rating so that you can access better deals in the future. Bear in mind that these are likely to have lower credit limits and higher interest rates than other options, so you should make sure you pay the bill in full every month.

 

What credit card is right for you?

There are a number of different credit card types available, some will reward you for spending money, others are suited for travelling abroad and some are ideal to spread the cost of a big purchase. 

Here, we round up the different types of credit cards available. If you would like more information about each type of card, check out our guide on credit card types.  

Best for clearing debt

If you have a store card or credit card debt, you should consider a 0% balance transfer credit card.

These cards allow you to shift your debt from the expensive card, onto the 0% balance transfer card, usually for a fee but will give you a set amount of time to pay off the debt interest-free. 

This gives you the chance to pay down the debt faster and save money, as all your payments will go towards the debt rather than the debt and interest. 

If you’re in overdraft debt, you could use a 0% money transfer card. These allow you to shift money from the card into your bank account as cash. You will then be given a set amount of time interest-free to clear the debt on your credit card. 

Best for getting cashback and rewards

Some credit cards will pay you a percentage of what you spend as tax-free cash, which is usually credited to your account once a year.

But they're only worth considering if you pay off your credit card bill in full each month – otherwise, the interest will outweigh any rewards. 

You can also get a reward credit card that will give you points for your spending, such as Nectar and Avios. These cards work very similarly to cashback cards and should be paid off in full every month to avoid any interest charges. 

Best for spending abroad 

Most debit cards charge you a foreign loading fee if you use them for purchases abroad. This is also the case for most credit cards, but some will waive this fee on transactions made overseas. 

Best for spreading the cost of a big purchase 

These cards offer 0% on purchase deals, which charge no interest for a limited time. 

This means if you purchase a new sofa at £2,000, you could split the cost of it into monthly installments and not have to pay any interest for 24 months - the longest deal available right now. However, you still need to pay the minimum amount each month or you will lose the 0% deal.

What to consider before you apply

Once you’ve decided what credit card type is right for you, you should carry out the following steps before applying:

Check your credit score

It’s a good idea to check your credit score regularly as those with the best scores get offered the best deals.

Your credit score will affect your credit limit (how much you will be able to borrow), how long any introductory deals will last and the interest rate you’ll be charged. 

You can check your credit score for free online and some credit reference agencies will even give you tips on how you can improve it. 

Check your eligibility

When you apply for a credit card it will leave a mark on your credit file, so if you apply and you are rejected, it will be more difficult to get a card in the future. 

This is why it’s always best to check your eligibility first. Most credit card providers will have an option to do this on their website beforehand. 

Check what details you need 

Once you’re ready to apply for your card, you will need the following information: name, address, date of birth, nationality, employment status, and salary. 

Three ways not to use credit cards

There are some things you shouldn't do with a credit card, including:

Paying for foreign currency

If you want to buy foreign currency before you go on holiday, don't pay by credit card – not only will your card provider charge you a cash advance fee, most will also charge you a higher APR and you won't get an interest-free period, even if you repay your bill in full and on time.

The same can go for buying gift cards and vouchers.

Paying by credit card cheque

Credit card providers aren't allowed to send unsolicited credit card cheques anymore, but if you've got any hidden in a drawer or if you've opted into receiving them, shred them now.

Section 75 cover never applies to credit card cheques, and you'll have to pay a fee to use one.

Withdrawing cash

Cash withdrawals attract a withdrawal fee, as well as a higher APR, and don't enjoy the interest-free period available for other types of spending.

They are also recorded on your credit report and can be viewed by lenders as a sign of financial stress, something that could affect your ability to get credit.

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