Compare Credit Cards

A credit card is a plastic card that you can use to buy goods and services using money you borrow, as opposed to a debit card that uses money that you already have in an account. Credit cards are usually powered by Visa, MasterCard or American Express to process payments.

A lender must agree to give you credit before they hand over one of their coveted cards, on the understanding that you will be paying them back the funds you spend, as well as any previously agreed charges and fees. The lender will want to know your credit history – if you have or have had any debt in the past, and how you've handled it – before they can decide whether you're trustworthy, and what interest rate they would be willing to offer you.

Once you've got the card, you can use it in any way that you like (though beware that there will be different charges depending on the kind of card and how you use it, explained further below). Just remember to pay back at least the minimum required every month, and more if you can, otherwise your debt may get out of control.

Credit card applications are now mostly made online, but it’s still perfectly possible to apply for a bank credit card in branch, by post or over the phone. You’ll need all your usual details to hand as well as some of your financial details. If you’ve lived at your current address for less than five years, then you’ll need to provide details of all your previous addresses.

In addition, if you’ve changed your name (through marriage, divorce or by deed poll), then you will have to supply this as well. The card provider will also want details of your employment (if you are currently working full or part-time), your salary and an idea of your current outgoings and debts – so expect to be asked how much you pay a month for rent/mortgages, utility bills, groceries, any child support payments and, of course, details of any loans, credit cards or other credit arrangements you have.

Before you apply for a credit card, it’s always a good idea to check your credit score. This will not only determine if your application is accepted, but also what your credit limit will be set at. For more information, read our How to improve your credit score and your chances of getting a credit card.

Sometimes you will be told instantly at the end of the application if you have been successful or if the credit card provider needs a day or two to assess your suitability. You may also receive an acknowledgement and further information by email, but the physical card and any new PIN numbers will be sent separately and will arrive up to 10 days later in the post. 

Having the use of a credit card can be very handy in many ways. However, for all their good points, there are equally things that you must be careful of when you are thinking of applying for a credit card. They are, as the old saying goes, “a double-edged sword”.

Firstly, think carefully about why you want a credit card. Is it as an emergency back-up if you have a sudden expense that you can’t cover any other way? Is it to repay debts you’ve accumulated? Or do you intend to use it to spread the cost of a big purchase in the near future? All of these are valid reasons and knowing its intended purpose will help you choose the credit card that is right for you.

If you’ve never had a credit card before, it can sometimes be difficult to be approved, for the simple reason that you won’t have an extensive credit history. You can lay the foundations beforehand by making sure you’re registered on the electoral roll, paying bills on time, effectively managing a current account or mobile phone contract and ensuring you have a regular income, though be prepared for the fact that you may only be approved for a credit builder card in the first instance.

These cards usually come with higher interest rates and lower credit limits than their more mainstream alternatives, but they can be the perfect stepping stone for a different card later down the line. Provided you show that you’re a responsible borrower – which means paying at least the minimum payment each month, but ideally the full balance, if only to avoid excessive interest charges – you can build a positive credit history, and it may only take a few months to be approved for a different kind of card.

The credit limit – or the maximum amount a provider agrees to lend you – will vary depending on your individual circumstances. Your credit score will again be the key determiner of this, though things like your income, outstanding debts and the amount of credit you’ve already got available to you will also come into it.

For new borrowers with no credit history, the credit limit is likely to be a lot lower than someone with a decent credit score. In some cases credit limits can be set as low as £50, and they’ll rarely be higher than £1,500 for a first or credit builder card.

That said, the limit can quickly increase once you show you’re a responsible borrower – the average credit limit is between £3,000 and £4,000, and it isn’t uncommon for those with high incomes and good credit scores to have limits of £10,000 or more. Though it’s best not to request a higher limit yourself if you’ve only had the card for a few months, as doing so could indicate financial difficulty and, if the lender declines, it could impact your credit score. Instead, wait for the lender to offer it to you once you’ve proved your creditworthiness.

You can, but it may not be wise. For starters, you’ll need to make sure that any interest charges that are applied as a result of your spending won’t push you over your credit limit – in which case you’ll face additional fees – and you may find it more difficult to bring it back down to manageable levels if you use too much of your balance.

Maxing out a credit card can also negatively impact your credit score, particularly if it’s your only card or you’ve maxed out others; it’s generally recommended to only use a maximum of 25-30% of the credit available to you (what’s known as your credit utilisation ratio) to show lenders that you’re not struggling financially. As such, if you spend all of your limit it’s an indicator that you’re facing financial difficulty, and your credit score could be impacted as a result.

This will typically depend on the lender and their requirements for your credit score and history. You can check your credit score for free in some cases. The higher your score, the better your chances of being approved, and the better the terms you’ll likely be offered. If your score is lower, you may still be able to apply for a bad credit or credit builder card.

By far the easiest credit cards to get approved for are those designed for bad credit. These credit builder cards will still run a credit check, but lenders will typically accept a lower score than they would for more mainstream credit card deals. However, the interest rates will be far higher, so you’ll need to make sure you can manage them effectively to prevent your score from being hit even further.

If you’re worried about being approved, it’s worth heading straight for providers who offer credit builder cards, many of whom will have an online eligibility checker so you can see your chances of success before applying. These tools normally don’t show up on credit reports, so they won’t affect your score if you’re unsuccessful.

To know which card will work best for you, you'll need to know what different types are available, and what they do:

• If you want to consolidate debt

  0% balance transfer cards can be ideal for consolidating debt, as they give you a certain number of months (or even years) interest-free to pay off the balance you put on the card. Although they usually come with a balance transfer fee, it is likely to be cheaper than leaving your balance on a typical card paying your purchase rate (though note that there are interest-charging cards that may charge no fee, which could turn out to be more suitable for your needs). Similarly, you can also find cards that offer 0% money transfer deals, which can be used to transfer funds to your current account to pay off overdrafts as well.

• If you want to make purchases

  0% purchase cards allow you to make purchases for a certain number of months without paying interest. If you're looking to make a big purchase with a credit card at a low rate or want to take advantage of (online) purchase protection, these cards could be for you. As with balance transfer cards, it's recommended you pay off what you owe on these cards before the introductory period ends, so you can avoid paying interest altogether, and remember to pay at least the minimum amount each month otherwise the introductory offer might be withdrawn.

• If you want to consolidate debt and make purchases

  0% interest cards combine the above, giving a certain number of months interest-free on balance transfers, purchases and sometimes also money transfers, in case you've got both debt and more purchases you need to make. These cards will probably be less generous than the single-purpose cards, with shorter interest-free terms, so always compare to find the best credit card deals.

• If you want to be rewarded for making purchases

  Cashback credit cards give you a certain percentage of cashback every time you use the card to make a purchase, which means you could actually make money shopping if you manage to pay off the balance and avoid interest every month. In the same vein, reward cards allow you to get certain non-monetary rewards for using them.

• If you're going abroad

  Travel credit cards are designed to be specifically used abroad – unlike other credit cards, which tend to charge high fees for any use outside of the UK. So, if you're going away and would rather not rely on travel money or a prepaid travel card, or you would prefer to pay off the balance after the holiday rather than save up in advance, one of these cards may be for you.

• If you need to repair your credit score

  Credit repair cards, if used responsibly, allow you to repair a credit rating that has been damaged by debt accrued in the past, or can help you build a rating if you've never had credit before. Make sure you don't have any other credit cards or debts that could undo all the good work of using these cards, and remember to repay them every month, and you should be able to get your credit score back up to scratch over time.

Whatever you need, make sure you compare credit cards to find the best credit card deals. Also, check that you are eligible before you apply for credit, and that doesn’t just mean having a good credit rating. Are you old enough? Have you been a UK resident for long enough? Some lenders may insist you earn a certain amount per year, or that you already have an account with them, so check that it’s a good fit before you apply, otherwise you may jeopardise your credit score for no reason!

This will depend on your individual requirements, though arguably, a card that offers cashback or rewards will be best for everyday spending. That way, you can earn something back on things you were going to buy anyway, and as long as you make sure to repay the full amount each month – failing to do so means interest could be charged, which could quickly overtake any cashback you may have earned – it could prove to be a lucrative option.

Indeed, people often use such cards in place of their debit card and pay the balance from their next paycheque, though there are of course risks to this strategy, the most notable being that you spend more than you’ll be able to pay off. For that reason, this technique should only be used by those who are truly financially savvy, and are sure they can afford to repay the balance each month.

If you’ve got a big purchase coming up, you’ll want to look for a 0% purchase credit card. Doing so will allow you to spread the cost of the purchase without interest adding to the bill, which can be ideal for those who haven’t been able to save up in advance – and if managed correctly, it needn’t cost them any more. This means you’ll need to make at least the minimum repayments each month and should aim to repay the full amount by the time the interest-free period ends.

While a credit card can be a great way to manage your money if used wisely, there are certain things you should never buy with credit. This includes foreign currency or anything to do with gambling, such as betting chips or deposits for online casinos. This is because you’re using the credit card to buy money, and you’ll be charged additional fees accordingly.

In a similar vein, never use a credit card to withdraw cash from an ATM – again, you’ll be charged additional fees, and you’ll also be charged interest from the moment it’s withdrawn, rather than from the following month (as per other purchases).

Aside from considering which introductory offer is more generous, the main thing to look out for when you compare credit cards is the APR (annual percentage rate) that is charged. Credit cards are regulated by the Financial Conduct Authority (FCA), which requires a clearly indicated APR that allows easy comparison between cards. This relates to the interest that at least 51% of customers will be offered on standard purchases per year. This makes it easy to compare credit card rates at a glance but remember that you may not get this rate; bear in mind too that if you're looking to use the card solely for transferring debt, you may want to look at the interest charged on that instead.

Next to interest rates and introductory offers, you may also want to look at eligibility criteria and how you can apply for and manage the card. A card that is appropriate for most people might not be the right fit for you, which is why it's so important to always compare the best credit card offers to find the one that's best for you.

You'll have to pay interest based on the rate that your lender has set unless you manage to pay off the balance each month before interest can be charged or you are benefitting from an interest-free period. Additionally, most providers charge fees for balance and money transfers, as well as for taking out money.

Unless you're getting a travel credit card, you will likely pay fees on withdrawals or any spending made abroad, and even travel cards might still charge something. Last, but certainly not least, be careful as some lenders charge an annual fee for having the card, even if you don't use it.

Your credit limit will depend on your credit score and other criteria, so there is no way to know until you've applied. That's why it's important to make sure you choose a competitive card and have your finances under control before you apply. Check your credit score for free today. 

After you've chosen the best credit card offer for your needs, you will have to supply the provider with personal details so that they can run a credit check. If you apply online, this process can take as little as 15 minutes, whereas applying in branch or by post can take somewhat longer.

Different lenders will take different amounts of time to approve your application (this will again depend on how you apply) and send over the card. Generally, however, you can expect your plastic friend around 10 days after you've been approved. Still, if you need it for a specific purpose, apply for a credit card a month in advance to be sure you get it on time.

As you are not required to put your property or possessions up as security when taking out a credit card, they can be considered unsecured debt. However, if the situation gets so bad that you are unable to pay back what you've lent without selling your car or house, these possessions could still be at risk.

Mortgage applications require credit checks, to make sure you're a safe bet for the mortgage provider. Since your credit rating is affected by owning a credit card – positively if you've managed to pay the balance off every month, negatively if you've accumulated debt on it and/or missed payments – your credit card will most certainly affect the success of the application. For that reason, it's a good idea to check your credit score before you apply for either a card or a mortgage.

As mentioned above, under Section 75 of the Consumer Credit Act 1974 you may be refunded for a purchase that is faulty, substandard or has gone missing.

This depends on the provider, but there is certainly an increasing number of credit cards available that allow contactless payments.

Yes, but due to the high charges usually associated with this it is not advisable to use a card for cash withdrawals.

While it is possible to have multiple cards tied to the same account, there is always one person solely responsible for the debt that is accrued on the account. So, while you can arrange for your partner (for instance) to get a credit card on the same account, you would be responsible for ensuring that the balance gets paid off.

In the UK, credit cards cannot be used for direct debits. However, you may want to consider setting up a direct debit from your bank account to pay off (a certain percentage of) your credit card debt each month.

To transfer money from your credit card to a bank account, you’ll need a money transfer card or one that has this ability. Transferring money is quite simple and can be done online or by phone. You’ll have to provide the sort code and account number and the transfer can take as little as two hours up to a couple of days, depending on who you bank with, your credit card provider and anti-fraud checks.

Depending on your credit card and any special deal that might apply, you will likely have to pay a fee on top of whatever sum you transfer. In addition, make sure you are aware of what, if any, interest will be charged and if you have any 0% interest-free periods that you can take advantage of.

If you cannot transfer money directly from your card to your bank account, you might be tempted to withdraw cash from an ATM on your credit card to deposit in your account. However, before you do, make sure you read our Beware of credit card cash advances guide.

Theoretically, there’s no limit to how many credit cards you can have. So long as you have a decent credit score and can convince the provider that you can afford this new line of credit, you should experience few problems.

However, in practice, you may find that credit card providers may be wary of issuing you with a credit card if you have several already – even if these are not carrying any outstanding balances. While this might not be a ‘deal-breaker’, you should expect that they may ask a few more questions and take a bit longer to consider your application.

Also, bear in mind that applying for a new credit card will show on your credit record and may cause your credit score to temporarily drop. Therefore, it’ not wise to apply for several cards in a short amount of time.

Yes, if you are buying from a dealership or motor trader then they will be happy to accept your credit card as payment.

This may be a good idea if you have a 0% interest offer on purchases with your card as this can allow you to spread the payments over a longer period without incurring any interest.

However, pay careful attention to the APR you’ll be paying once this interest-free period ends as, if you can’t repay the whole amount during this period, the interest charges could soon start to mount up. You might also want to compare the cost of credit between your credit card or using a loan instead, which could be cheaper over the long-term.

To find out about alternatives to buying a car with a credit card, take a look at our guide to car finance and leasing or unsecured car loans.

There may be a time when you’d like to cancel your credit card. Doing this is straightforward but remember that you’ll need to pay any outstanding balance back, along with any interest due, before the card provider can close your credit card account. You can find out more about cancelling your credit card by reading our Want to cancel your credit card? guide.

Credit card debts unfortunately remain after you die. Any outstanding balances will have to be settled by any remaining assets you have left, including savings accounts, property or life insurance pay-outs. 

The only exception to the above is if you have valid payment protection insurance for the credit card. This will settle the outstanding debt in total or up to a certain limit if this is a limited policy.