Credit cards - Confused.com Tips on Finding the Right Plastic for You

• Top Tips
• Published: 20 Feb 2009 in Money and Credit Cards

Expert advice on how to choose the right card 

Credit cards are like Marmite. Some people swear by them, others can’t stand them. During these difficult economic times, many people are thinking twice about taking on further credit. But cards can be useful to have around, as long as they’re used sensibly. 

“A lot of people are still applying for credit cards and loans,” Jasmine Birtles, expert and author of The Money Magpie, tells Confused.com. 

“Credit cards are harder to get, and even though the interest rates have gone down, the average credit card interest rate has gone up. This is because companies are paying higher interest on the money they borrow to pay for your spending. 

“It really depends on your situation to choose the best credit card, and which ones you’re able to get, because it all depends on your credit rating,” she adds.  

Check your credit rating 

You can check your credit worthiness by getting a credit report.  

Credit reference agencies store collate from court records, the electoral roll, and financial data provided by financial organisations. Information included details any defaults or late payments, but also the amount of credit available and the amount that you repay.  

Lenders will generally refer to at least one credit reference agency before determining whether to lend to you, so if you’ve used a credit card and have a proven track record of reliable repayment, this can make you more appealing to a credit card lender.  

If you’re keen to discover what your credit rating is, try Confused.com’s credit rating service.  

Cards, cards, cards 

“I’d recommend getting a 0% credit card with 0% on transfers and 0% on purchases,” says Jasmine. “But not everyone would be allowed one. You have to have very good credit rating. 

“And I wouldn’t advise everyone to apply for a card, because if you’re turned down, that will be mentioned in your credit report so you can actually harm your credit rating.” 

If your credit rating isn’t perfect, don’t worry, there are still options open to you. For more info on credit cards for those with a poor credit history, read Credit Card options for those with a poor credit history. 

Be rewarded 

If you have good credit and can pay off your debt every month, a card with rewards from supermarkets, banks and airlines could be a good move. 

“There are cashback cards,” Jasmine says, “and if you’re going to spend anyway, why not get some cash back? Or you could get air miles, points or even a flight if you spend a certain amount.” 

If you can’t pay off your card in full every month, however, consider opting for a credit card that offers 0% on purchases or one with a very low interest rate so you don’t lose out too much. 

Boost your score  

If you have poor credit rating, have been made bankrupt or have an IVA (Individual Voluntary Arrangement), you’ll generally be offered expensive cards. 

“I’d recommend getting whatever credit card you can get,” Jasmine says. “Even if it’s 25% or 30% interest rate. Pay off the debt religiously every month before the interest rate kicks in. If you do that for six months or so, that will gradually improve your credit rating.” 

Pre-paid credit cards 

Pre-paid credit cards are becoming more popular. Working on the same concept as pay-as-you-go mobile phones, they are pre-loaded with money, which is the limit you’re able to spend. 

“They’re very good for people in debt, who’ve been made redundant, declared bankrupt, can’t get credit, going abroad or are very bad with credit card spending,” adds Jasmine. “It’s money that’s yours and isn’t attached to your bank account. You can’t borrow anything on it. It’s just a replacement for cash.”  

Confused.com’s top tips on choosing the right credit card for you: 

1. If you pay off your entire card bill religiously every month, consider choosing a credit card that offers good rewards. 
2. If you don’t tend to pay off your bill in full each month, compare credit cards to see which plastic gives you the lowest interest over the longest period.  
3. Don’t have too many – temptation to spend aside, too many credit card applications is not good for your credit rating!