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Choosing the right credit card for you

Credit cards may seem like a regular fixture in a lot of people’s wallets and purses, but if you don’t have one, how do you go about choosing the card that’s right for you?

The first thing to bear in mind is that there’s no such thing as the ‘best credit card’. It all depends on your unique circumstances and needs at the time you apply. What might be perfect for one person may not be perfect for you, and just because a card is being advertised everywhere, it doesn’t necessarily mean it’s something you need.

You want to earn cashback as you spend You regularly travel abroad You want to reap rewards
You want a low interest rate - for life You want to make managing your debts simpler You want to build your credit rating

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You want to earn cashback as you spend

A cashback credit card gives you a percentage of the money you spend back as cash. Potentially, you could earn tens or even hundreds of pounds a year by shopping in this way – although you’ll still need to manage your borrowing responsibly.

You can spend the cash you earn using your credit card on whatever you like – it’s your money to do with what you will, and the cashback should be tax-free. However, if you have outstanding debts you’re trying to clear, a cashback card may not be the right option for you. Instead, you might be better off focusing on clearing the debts you have rather than taking on a new one.

A popular alternative to cashback cards are those that allow you to collect loyalty points rather than cash. These are sometimes linked with particular shops and mean that you can earn points to spend there.

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"Using your usual debit card or credit card abroad can result in you paying additional charges."

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You regularly travel abroad

Ordering currency every time you visit a new country can be time-consuming, and carrying cash around in your pocket is not the safest option – if someone steals it, it’s very hard to get it back. However, using your usual debit card or credit card abroad can result in you paying additional charges.

If you regularly find yourself overseas, either for work or – if you’re lucky – leisure, it might be worth applying for a credit card that’s specifically designed to be used abroad. One of the things that makes these cards cheaper than those not designed for use abroad is that they are less likely to add a fee to the exchange rate, which means you should benefit from a more attractive currency conversion.

You want to reap rewards

As well as cashback, there are other rewards available depending on what card you apply for. A popular option is a card that lets you collect air miles as you spend – which may be perfect if you’re something of a jetsetter.

Always check that you’ll save more by collecting air miles once any fees and charges have been taken into account than you would simply by shopping around for cheap flights. And it may sound obvious, but only apply for a credit card that’s linked to the airlines you regularly fly with, or you could find you have little use for your reward.

Other rewards that certain credit card customers can enjoy include fuel points, which let you collect points for petrol or diesel as you spend, and so are great if you’re a heavy commuter. Just be sure to always take the time to consider whether the rewards you’re being offered really will benefit you. If they don’t, a low balance credit card might be more attractive.

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"There are some cards that offer a permanently low rate of interest."

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You want a low interest rate - for life

Credit card providers may offer a low interest starting rate on their cards in order to tempt customers in, but this is often a temporary option. However, there are some cards that offer a permanently low rate of interest.

These usually lack some of the other incentives credit cards can offer, like cashback and rewards, but you should see the low interest rate itself as the reward. This type of card may be particularly tempting if you worry you might not be able to pay off your credit card balance in full every month, as you won’t have to worry about paying a lot of interest on top. However, you should make sure you can afford what you’re spending and pay off as much as you can each month – or it might be that a credit card isn’t suited to your needs right now.

You want to make managing your debts simpler

Not everyone chooses a credit card because they have a desire to spend and earn rewards; for some the motivation is to make managing their current borrowing easier.

If you have several credit and store card debts and you’re finding it difficult to keep track of the multiple repayments you’re charged each month, switching all the balances to a balance transfer card could be an option.

There are 0% balance transfer cards available that let you move your current balances to them and then pay the debt off with just one payment a month – and no interest. Keep in mind that the 0% rate will probably not last forever and to get the most from your card you should aim to pay off the entire balance or as much of it as you can before the interest rate goes up.

There may also be a fee involved to shift your balance from one card to another. And don’t be tempted to start spending on your newly-cleared credit cards either, as this could put a strain on your finances. Instead, cut these up and avoid borrowing more until you have paid off your balance transfer card.

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"If you have never had a credit card, loan or mortgage, you may not have much of a credit rating to speak of."

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You want to rebuild your credit rating

If you have never had a credit card, loan or mortgage, you may not have much of a credit rating to speak of. This can make lending difficult and may mean you lose out on some of the better deals available as lenders don’t have the proof they need that you’re able to borrow and pay back money responsibly.

If you’re looking for your first mortgage or a loan, you could find you’re turned down as a result, which can be frustrating.

There are some credit-builder credit cards, such as the Ocean Credit Card, available that allow people with a limited credit history to build one. Often, the interest you pay on these is slightly higher and there may not be any additional benefits, but once you have built up a healthy credit rating you could consider switching.

Just make sure that you pay off your borrowing on time every month and where possible pay in full. If you miss repayments or pay less than the minimum charge you could find you end up harming your credit rating.

Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds
Check Now 39.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender