1. Choose a card to suit your spending
Which card type you opt for depends entirely on your financial goals. Is it to spread out the cost of buying a big-ticket item, or earn rewards on your everyday spending? Maybe you’d like to cut the cost of paying back existing debt?
Our guide on deciding which credit card is best for you explains how each type of card works along with some important need-to-knows.
You can also use our eligibility checker to compare cards and find out your chances of getting accepted. And as it only uses a soft search, your credit score won’t be affected.
Compare the Marked Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and availability.
2. Always pay on time (and more than the minimum if you can)
Repaying what you owe each month is one of the best habits you can have. Not only does it keep your credit score healthy but it could save you a sizeable sum in interest.
Aim to:
Clear your credit card balance every month if you can, to avoid any interest
If not the full balance, then aim to pay more than the minimum. Only making the minimum repayment means you’ll be in debt for longer and pay more interest overall.
Get more tips on how to pay off your credit card debt.
3. Set up a monthly direct debit
Life can quickly get hectic and, amid all your financial commitments, it’s easy to forget the due date for your credit card payment. Setting up a direct debt to pay your card each month can save you (and your bank account) a headache.
If you miss a payment, you risk being hit with a late payment fee (which usually costs £12 each time).
When paying via direct debit, you can choose to pay:
The full balance
The minimum amount
A fixed amount.
Bear in mind...
If you do miss a payment, as well as the risk of a £12 late payment fee, your credit score will take a hit and you could lose any 0% promotional interest rate.
4. Put the last day of any interest-free period in your diary
If you’ve been approved for a 0% purchase or balance transfer credit card deal, it’s vital to keep track of when the interest-free period finishes.
Pop this date in your diary so you can clear your balance in time and avoid paying interest. Most cards move onto the lender’s higher standard rate after the 0% period, and interest costs can mount up quickly.
Quick tip
If you're using a 0% interest card to buy a big-ticket item, divide its cost over the length of the 0% period.
This helps you work out how much you need to pay off each month to clear the balance before the interest rate goes up.
5. Only spend what you can afford to repay
It can be very tempting to reach for your card when you have a considerable amount of credit available. But remember, owning a credit card isn't an invitation to be reckless and max out your credit limit.
If you limit your use of the card to normal everyday spending, it can be a good way to build up your credit score and earn potential rewards without racking up lots of debt.
Quick tip
Get set up for online banking and download your lender’s app (if it has one). This can help you keep track of your spending and stay in control.
6. Stick to your agreed credit limit
If you spend above your agreed credit limit, you’ll pay a penalty called an overlimit fee. This is usually around £12.
What’s more, going over your limit will also have a damaging effect on your credit score. This in turn could make it harder to borrow in the future. You can find out more in our guide on what happens if you go over your credit card limit.
And, while we're on the subject of credit limits...
7. Keep your credit utilisation as low as possible
This is critical to keep your credit score in good health. Your credit utilisation ratio tells you how much of your credit limit you’ve used. Say your credit limit is £2,000 and you’ve spent £1,200 - your ratio is 60%.
As a rule of thumb, try to keep this number below 30% where possible. For example, if your limit is £1,000, aim to keep your balance below £300.
Quick tip
Check your credit score for free using credit reference agencies (CRAs). The main ones in the UK are Equifax, Experian, and TransUnion. Keep in mind that your score may vary slightly between the three.
8. Make the most of any rewards on offer
One great benefit of a credit card is Section 75 protection on goods you buy that cost between £100 and £30,000. In a nutshell, it means you should be able to claim back your money if you have trouble with a purchase.
But if you choose a rewards credit card, you could also get other perks such as:
Points
Discounts
Access to exclusive events and experiences
Check for any time limits or expiry dates on your rewards. And make sure that the benefits on offer still suit your spending and financial needs.
This is especially important if you’re paying an annual fee for your rewards card, as you'll want to make full use of your perks to make it financially worthwhile.
FAQs
Can I withdraw money using my credit card?
Yes, you can withdraw money on a credit card, but it’s very expensive. This is called a cash advance, and usually comes with:
A cash advance fee, which can be a fixed percentage of the amount taken out
Immediate interest charges as soon as you withdraw the money
A higher interest rate.
It can also affect your credit score, as lenders might see it as risky behaviour. So, unless it’s an emergency and there are no other options, it’s sensible to avoid it.
Can I transfer credit card cash to a bank account?
Some providers let you transfer money available on your credit card to a bank account via what’s called a money transfer credit card.
These cards are designed specifically for this purpose and often offer a 0% interest period such as those for balance transfer cards. But:
You’ll often have to pay a money transfer fee, which varies depending on the provider
Like other 0% credit cards, you’ll need to keep up with your payments and stick to your agreed limit, or you risk losing your 0% interest rate.
With almost 10 years’ experience writing, leading and managing content, Allie is an expert in personal finance and insurance products. She’s spent her career helping others quickly understand complicated topics, to help them save money and focus on what matters.
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