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You can spread the cost of expensive items over several months
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Using a credit card grants you additional protections under Section 75 of the Consumer Credit Act
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Using a credit card responsibly could help improve your credit rating
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Depending on the card, you might be able to manage existing debts a little better
What are the different types of credit cards?
We've summed up the main types of credit cards to help you choose the right one for you. Before you get a credit card, think about your financial situation and why you need it:
Balance transfer credit cards
This type of credit card lets you transfer your debt from an existing credit card to a new credit card. By doing this you could save money as long as the new credit card has a lower interest rate, or a 0% interest rate for a set period. You might have to pay a fee for transferring your balance, which can range from 2% to 4% of the transferred balance. Always check the terms and conditions to ensure that the new credit card works for you.
To be eligible for the longest interest free periods, you need a good credit history.
Purchase credit cards
This card works best for people who use their credit card for shopping. Purchase credit cards usually come with a 0% interest period that can last several months. So, you can spread the cost of expensive purchases without having to pay interest on them for that period. Just be aware that the after the 0% interest period ends, you'll be charged interest on any balance left over, or any additional purchases made on that credit card.
Credit builder credit cards
These cards are designed to help you build or repair your credit score. They tend to have higher interest rates and low credit limits because credit card companies offer these types of cards to high risk borrowers.
Reward credit cards
These are credit cards that offer extra benefits for using them, for example:
- Cashback
- Air miles
- Store discounts
Depending on the lender, reward credit cards often come with an annual fee or higher interest rates.
Travel credit cards
Travel credit cards are aimed at those who travel. Many standard credit cards charge extra fees for spending abroad. Travel credit cards let you make purchases abroad and pay them off later just like other credit cards without being charged for spending abroad. This is different to prepaid travel cards, which you add money to before you travel.
Money transfer credit cards
These cards let you to move money from the credit card to your bank account, which allows you to use money to pay for bills or shopping.
What are the pros and cons of having a credit card?
Need more help?
Are all credit card customers offered the same rate?
No. Everyone's financial circumstances are different and credit card lenders take this into account when offering interest rates. A person with an excellent credit score might be offered a better APR than someone who's getting a credit card for the first time.
Can I cancel a credit card application?
Technically no. Many credit card lenders offer 'instant' approval for their cards, which often happens within minutes or even seconds. The time between you hitting 'apply' and the application going through is often too brief for you to change it.
But, if you've been accepted for a credit card you do have 14 days to cancel the card if you change your mind. This is known as a cooling off period.
If you've gone past the 14 day period, you can can close the credit card by contacting your lender and asking them to close the account for you. You'll need to pay off any outstanding debt on the card before the account can be closed.
Can I get a credit card if I have bad credit?
Yes, even those with bad credit can usually get a credit card, but they have fewer options to choose from. They might also be offered a high interest rates and a low credit limit.
That's because having a poor credit history means you're a higher risk borrower, so lenders protect themselves by charging you more for credit.
If you're concerned about your credit rating, it might be worth looking to improve your credit score before borrowing.
Can I pay off my credit card debt early?
Yes. In fact paying your whole balance every month means that you won't be charged interest on your debt.
Interest only applies when you carry over your outstanding debt over to the next month's billing cycle.
If you're unable to pay off the entire balance every month, it can be beneficial to pay off as much of it as you can afford to every month. This reduces the amount of interest you are charged and save you money in then long run.
But always make sure you're at least paying the minimum payment every month to avoid missing a payment. A missed payment can be subject to additional fees, and can also harm your credit score.
Do interest rates change?
Yes, interest rates can change. When you're offered a credit card, the APR is usually marked as 'variable'. This means it could go up or down depending on:
- Changes to the Bank of England Base Rate
- General changes to the UK economy
- Changes in your finances that impact your ability to repay the debt
Your credit card provider is able to change interest rates at their discretion. But they must give you at least 30 days' notice of any changes.
How do I apply for more credit?
Your lender sets your credit limit when you first get the credit card. Before you decide to increase this limit, think about whether you're able to pay back the extra debt.
You should get in touch with your credit card company directly and ask about increasing your credit limit.
If you've been with a lender for a while and have been regular with payments, they might even offer to increase your credit limit without you having to ask. But if they do offer it, it's up to you to have it increased or not.
How do I find out my credit score?
There are several places where you can check your credit score, but there are three main credit referencing agencies that most banks use:
- Experian
- Equifax
- Transunion
Each of these agencies use slightly different scoring systems. But no matter which one you use, you should be able to see whether your score is good or bad. Checking your credit score is free, but some agencies might offer extra services for a fee.
How do I get a joint credit card?
Technically, you can't have a joint credit card - the account belongs to one person only.
But you can have additional cardholders. This means they get their own card, but you share the total credit limit between you. Be aware that only the account holder is subject to any credit searches. They will also be solely liable for paying for any debt accrued by both parties.
If you want to set this up, speak to your credit card provider.
Is my bank the best place to get a credit card?
It's good practice to shop around for better deals before you settle on a particular offer. Getting a credit card with your bank might be convenient, but they might not offer you a better deal than a different lender.
Or, other providers could offer additional benefits such as cashback, air miles or rewards. Always compare credit cards and see what deals are available before you make a decision.
What are the minimum requirements needed to apply for a credit card?
The specific requirements for a credit card vary between lenders. But as a general rule, you need to:
- Live in the UK
- Be over 18 years of age
What happens if I get rejected for a credit card?
The lender may or may not give you the reason you've been rejected for a credit card. They set their own acceptance criteria, and if you don't meet that, they can refuse your application.
Credit card rejections don't show up on your credit history. But any hard credit checks used to assess your application do.
What happens if I miss a repayment on my credit card?
If you miss a payment, you run the risk of:
- Getting a late payment charge
- Losing any introductory bonuses you had
- Paying a higher rate of interest as you risk being seen as a high-risk borrower
- Harming your credit score
What is Section 75 of the Consumer Credit Act?
Section 75 of the Consumer Credit Act gives you extra protection if you pay for something costing between £100 and £30,000 using a credit card. This means you could claim your money back from your credit card company if a retailer goes bust or lets you down.
Confused.com credit card comparison is provided by Uswitch Limited. Uswitch is an RVU Company. Uswitch Limited is authorised and regulated by the Financial Conduct Authority (FCA) under firm reference number 312850.
Uswitch Limited is registered in England and Wales (Company No. 03612689) The Cooperage, 5 Copper Row, London, SE1 2LH. Uswitch Limited is a credit broker, not a lender, for consumer credit products.