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.

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.

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.