Choosing the right credit card for you

If you’ve decided to get a credit card, it can be a bit overwhelming finding the most suitable one for you. Which credit card is right for you depends on your individual circumstances, the type of credit card you want, and your reason for getting one.

5 min read
couple at bank getting credit card

Different types of credit cards

 The different type of credit cards that you can get include:

  • balance transfer credit cards
  • 0% interest credit cards
  • ‘bad credit’ credit cards
  • rewards credit cards
  • money transfer credit cards

You might be able to find some credit cards that combine two or more of these options. For example, there are some cards that include a balance transfer option as well as a 0% interest introductory period.

Researching each type of card will help you choose the right one for you.

Balance transfer credit card

What is it? A balance transfer card allows you to transfer multiple existing debts to one card, so you only need to make one payment to one creditor each month. If used correctly, it can help you pay off your debts quicker and reduce the amount of interest you pay overall. 

The pros

  • instead of having multiple debts you need to pay each month, you can group them together, which can make your finances much easier to manage
  • these cards often come with an 0% introductory offer that can help you pay off your debts quicker

The cons

  • a 0% interest rate could seem like a good deal at first, but interest will apply after the offer ends, so it’s best to clear the balance in full in time
  • there’s usually a fee applied each time you make a balance transfer. This varies depending on the lender, so we suggest that you check the terms and conditions, before you sign up

0% purchase card

What is it? A 0% purchase card (or spending credit card) enables you to make interest-free purchases during a fixed timeframe. Interest will still apply on cash withdrawals, transactions made abroad and balance transfers.

The pros

  • you can easily spread the cost of a large purchase over several months, making it more affordable
  • purchases between £100 and £30,000 are protected by Section 75 of the Consumer Credit Act

The cons

  • 0% offers are usually reserved for those with good credit scores and they will only last so long. Once the fixed period ends, you’ll be charged the lender’s standard variable rate on any remaining balance
  • if you don’t keep up with your repayments, then you’ll be charged late fees. You could also end up having any benefits on the card removed (e.g. the 0% offer)

Bad credit credit card

What is it? Also known as a credit builder card, a credit card for bad credit is designed for those who have got a less-than-perfect or thin credit history. If you use it responsibly (by always paying on time), you can improve your credit score.

This type of card could be ideal for someone who has:

  • experienced debt issues
  • been turned down for credit in the past
  • has a CCJ on their credit file
  • has little to no credit history (aka thin credit)

The pros

  • if you manage your repayments correctly and stay within your limit, your credit history will improve
  • by building up your credit score with a card like this, you can apply for better credit deals in the future

The cons

  • credit cards for bad credit will often come with a higher interest rate and a lower credit limit, compared to mainstream cards
  • as with all credit cards, if you don't make at least the minimum repayment by the date specified, you’ll be charged a late fee, and cause further damage to your credit score. Ideally, you should repay the balance in full every month to avoid paying any interest

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Rewards credit card

What is it? A rewards credit card allows you to collect rewards on your normal spending.

The pros

  • you can earn rewards in the form of points, air miles cashback or other benefits
  • for example, you could save money on flights and travel insurance if these benefits are included

The cons

  • the interest rates on these types of cards are not usually very competitive
  • these types of cards often come with an annual fee too – so weigh up all the costs vs the benefits before signing up

Money transfer credit card

What is it? A money transfer credit card allows you to transfer money from the credit card into your bank account. Then you pay back the credit card provider for the outstanding balance.

The pros

  • these types of cards often come with a 0% spending period (if you’re eligible)
  • a money transfer credit card could save you money, if you use it to clear off an expensive overdraft, for example

The cons:

  • if you don’t make at least the minimum repayment on time, every time, you could risk damaging your credit score, incurring late fees and losing your 0% offer
  • you’ll normally be charged a one-off fee for transferring the balance to your bank account and interest will apply once the introductory offer finishes