With so many cards on offer, it can get more than a little confusing to decide which is best.
One of the problems with choosing a credit card is that there are so many options.
With different companies offering different levels of interest, introductory periods, fees and rewards, it’s enough to give even savvy spenders a headache.
So let’s simplify things.
Rather than thinking about what the different cards can do, think about how you plan to use it.
Let’s take a look at which cards are suited for which purpose.
I have an existing debt that I need to manage
If you’re paying off an existing debt, chances are you’re paying interest on top of the standard repayments. If that’s the case, a balance transfer card might be for you.
Balance transfer cards let you pay off an existing credit card debt by transferring the outstanding amount to the new card.
They often have 0% interest for a set period of time, so you only need to worry about paying off the balance.
These cards usually come with a balance transfer fee, typically around 3%.
Money transfer cards work in much the same way, but they’re used to transfer money to your current account.
This is used for paying off overdrafts, or if you need to beef up your bank balance before a big purchase.
Some cards even let you dodge the transfer fee. These low fee cards tend to have shorter introductory rates than balance transfer cards, though.
I want to use it for shopping
Fancy a spot of spending, eh?
Purchase credit cards are worth considering here. Many lenders offer an interest-free period, so you’re able to splash out without incurring interest on what you buy.
So long as you make your payments on time, you’ll be able to take advantage of having 0% interest.
Miss a payment, however, and the lender will likely take away that privilege and start charging interest again.
If you don’t think you’ll be able to clear the balance every month, you might want to opt for a low APR card instead.
While these cards tend not to have an introductory rate, you’ll often find that they have a lower rate of interest overall.
As a rule of thumb, any card with an APR of less than 15% is considered to be low rate.
I need to improve my credit rating
You might be having a spot of bother getting accepted for credit because you have a poor credit score.
You might not even have a credit score to begin with, and this will be your first credit card.
In either case, a credit-building card will help you on the road to being accepted for other forms of credit.
These cards tend not to have any bonuses like 0% interest periods or low fees – they’re bog-standard, no-frills cards.
So what makes them good for credit building?
Because they’re more basic, these cards have a higher rate of acceptance, even from people with lower credit scores.
The trick here is to pay your balance off on time every month to show banks you can borrow responsibly.
Then after a while you should be in a better position to upgrade to a card with better perks.
I’m just in it for the perks, thanks
If you’re lucky enough to not need to pay off an existing debt, require money for a big purchase and have a squeaky clean credit rating, there are still cards for you.
Rewards credit cards give you a number of perks every time you use them.
Store cards tend to offer in-store points whenever you use their cards. And you can also get cashback and airmiles – now known as Avios - from certain credit card brands.
So long as you pay off your balance in full each month, you should be eligible for these kinds of perks.
Whichever card you think is best for you, you can check your likelihood of acceptance by using this card matcher tool.
It will give you an indication of you eligibility without leaving a mark on your credit score.