Choosing and applying for a credit card
Choosing and applying for a credit card
Not everyone takes out a credit card to borrow money — there are plenty of other reasons you might need one.There are specialised credit cards for paying down existing debt, improving your credit score, travelling and earning rewards.
Balance transfer credit card
Also known as: 0% balance transfer card.
When should I use it? If you’re carrying over a monthly balance and paying interest on existing credit card debt.
What should I watch out for? Balance transfer fees — these are usually 2-4% of the amount transferred. Also, watch out for the date the 0% deal ends.
Credit builder card
Also known as: Poor credit credit card, bad credit credit card.
When should I use it? If you have a poor credit score and wouldn’t be accepted for a mainstream card. By borrowing a small amount of money on a credit building credit card, and repaying it in full each month, you can boost your credit score.
What should I watch out for? Higher interest rates and lower credit limits.
Also known as: 0% purchase card or 0% credit card.
When should I use it? If you want to spend without accruing any interest, but you don’t want to pay off your balance in full each month. These cards are useful for spreading the cost of large purchases.
What should I watch out for? Make sure you pay the minimum amount each month and try to clear your balance before the 0% period runs out and interest starts being charged.
Also known as: All-rounder, 0% balance transfer and purchase, or all-in-one credit card.
When should I use it? If you want to spend on the card and pay down existing debt at the same time.
What should I watch out for? 0% deals for purchases and balance transfers might end at different times, with high go-to interest rates afterwards.
Money transfer card
Also known as: Transfer credit card.
When should I use it? To pay down existing non-credit card debt such as loans and overdrafts.
What should I watch out for? Money transfer fees — these tend to be higher than balance transfer fees, usually at least 4%. Also, look for the date the 0% deal ends.
Also known as: Loyalty, Airmiles or store credit cards.
When should I use it? To collect points at certain brands or retailers. Points can be converted into cash, discounts or vouchers.
What should I watch out for? High interest rates, and annual card fees.
Also known as: Rewards credit card (but the reward is cash).
When should I use it? If you want a percentage of your spend back in cash.
What should I watch out for? High interest rates — you need to repay your balance in full each month to profit from cashback cards.
Also known as: Overseas credit cards
When should I use it? When you go abroad.
What should I watch out for? Dynamic currency conversion (DCC) — if an overseas retailer asks if you want to pay in pounds or the local currency, always opt for the local currency. If you choose pounds, the retailer will do the currency conversion, rather than your bank, and it will work out more expensive.
How to apply for a credit card
Do your research and decide which type of credit card works best for you.
Check your credit report to ensure everything is accurate. You can get mistakes and out-of-date information corrected by the credit reference agency.
Compare different credit cards in your chosen category and decide which one to apply for.
Use a credit card eligibility checker to get a good idea about whether you’ll be accepted for your chosen card.
Make your application and wait for a response from the credit card company.
If accepted, read the details carefully. By law, credit card providers only need to give an advertised deal to 51% of successful applicants. You might be offered a higher interest rate or shorter 0% interest period. Your card should arrive within two weeks.
If declined, don’t rush into making other credit card applications. Too many credit applications in a short amount of time can damage your credit score. Ask the credit card company why you were rejected.
See if you'll be accepted before you apply
Quick and easy to fill in your details.
Get a response in 60 seconds.
No impact on your credit rating.
Use your card sensibly — if you don’t make repayments on time or stay within your credit limit you will pay extra charges, forfeit the 0% offer and getting credit in the future may be harder and more expensive.