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There are more than 1,500 credit cards available in the
The secret is to understand how you will use the card - and be honest with yourself, too, as choosing the wrong card will probably cost you money.
How Will You Use Your Credit Card?
The first step is to work out exactly how you will use your card. Here are a few things to consider:
- Will you pay your bill in full every month?
- Will you be transferring a balance from another card?
- Will you spend a lot each month, or just use your card occasionally?
- Will you be using your card abroad a lot?
- Do you have a special interest/charity you would like to support?
The reason all this is so important is that most credit cards have several different interest rates - one for new purchases, one for balance rates and possibly an introductory offer as well.
In addition, some credit cards offer cashback and reward schemes that can benefit people who pay their bills in full every month.
Paying Your Bill in Full Every Month
If you are sure that you will pay your bill in full every month, then you don't need to worry about interest rates very much - after all, you won't be charged any.
Instead, you should focus your attention on cards that offer a benefit of some kind when you use them. There are three main types:
- Cashback - you get a small percentage of everything you spend credited back to your card in cash
- Reward - much like supermarket loyalty cards, you get points of some kind for every pound you spend
- Affinity cards - these are cards that are associated with a charity or special interest group. A small amount will usually be donated for each pound you spend
It's worth remembering that to benefit from these schemes, you really must pay your bill in full every month - just one month's interest will probably wipe out the benefits from a whole year of cashback.
After all, how do you think these cards make a profit?
Are You Transferring A Balance?
If you will be transferring a balance from your existing credit card, then you should look for a card with a zero or low balance transfer rate.
Balance transfer deals are often only for 6 months or a year, after which time your balance starts earning interest at a higher rate. If you think you will clear your balance quickly this is not a problem.
If you think your balance may take longer to clear, you might want to look for a lifetime balance transfer rate - one that will stay low, permanently.
If You Won't Pay Your Bill in Full Every Month
If you are not going to be paying off your bill in full every month, you need to look for a credit card with a permanent, low interest rate on new purchases.
There are plenty of these available and it is surprising how much interest rates can vary between similar cards, so make sure you shop around.
