Guide to Choosing a Credit Card
Quick guide to choosing the right credit card to suit your needs
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!
Home - Credit Cards
