Back in 1966, when the first credit card was launched in the UK, choosing a credit card was a very simple affair – you took what you could get.

The range of cards available slowly grew over the following years, until an explosion of card launches over the last decade resulted in credit cards being available in a bewildering variety of styles and brands, each with different benefits and drawbacks.

In this article, we hope to give some advice to help you choose the right card for you.

If you have a large debt on another card

If you are keeping a large balance on your current card, or medium balances on more than one card, you should think about making a balance transfer on to a new card. Many cards offer a 0% interest rate for balance transfers, so you will be saving money by not paying any interest over the period of the introductory rate.

The savings can be considerable – for example, if you moved £5000 from a card with an interest rate of 17.9%, you would save £494.48 over 6 months with a 0% interest card.

If you pay your bill in full every month

If you use your card for convenience rather than borrowing – such as buying online or not having to carry cash – and pay off your bill every month, you should look for a card that rewards you in some way for using it regularly.

Some cards offer a loyalty program where you earn points every time you spend, and these points can be saved up and exchanged for discounts on future purchases, special offers, or even paying off utility bills. A similar idea is cash back, where you are given back a percentage of everything you spend (usually between 0.5% and 2%).

An important thing to look out for with this kind of card is the interest free period. Most cards will not charge you any interest on your spending so long as you repay within a certain number of days (usually around 50 or so). Beware of cards that charge interest from the day you spend – if you repay your balance in full every month, you really shouldn’t be paying any interest at all.

If you use your card when money is short

If you use your card for ‘emergency money’ and usually keep a small to medium balance, you should be looking for a card with the lowest interest rate (APR). The lower the rate, the less interest you pay, and the more of your debt each monthly payment will pay off.

Credit cards often used to charge exorbitant interest rates of 20-30%, but over the years competition has brought the average rate down to 10-15%, and lower in some cases (although a good credit rating is usually needed). Be aware that when you apply for a card you may not be offered the advertised rate, as the issuer will take your income and credit rating into account when deciding which deal to offer you.

If you use your card for large purchases

By law, all purchases over £100 made with a credit card are insured by the credit card company. In other words, your card issuer must refund you if you don’t receive a purchased item. Some cards go further, with online safety guarantees, insurance on the item against damage during delivery, or other safety features. If you intend to buy valuable goods online or by telephone / mail order, you should choose a card with good protection benefits.

Also, large purchases can earn you larger amounts of rewards or cash back (in effect, a discount on your purchase).

If you have a bad credit rating

It used to be very difficult to get a credit card if you had a bad credit rating. Nowadays, more and more companies use a system known as risk based assessment, where people with poorer credit scores can still get a card – but at a higher interest rate from the one advertised.

However, if your credit rating is very bad, you may have no other option than a secured card where you must pay for any spending up front.

Conclusion

There are some great deals out there, but it pays to think about how you will use your card, choose one that meets your needs and always check the small print before committing yourself!