Which credit card is best for me?

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Which credit card to choose based on your financial needs

1. You want to pay down or clear off existing credit card debt

A balance transfer credit card can be a good option if you have existing debt with high interest rates. These cards allow you to shift your debt onto them for a set fee and offer a 0% or low interest rate for a set period.

This means you can avoid paying interest while repaying the balance. Depending on your credit limit, you can also transfer multiple credit card balances onto one card. Having one manageable monthly payment can make staying on top of your debt easier.

With a balance transfer credit card, you’ll need to:

• Keep in mind that you can’t usually transfer a balance between two cards from the same banking group.
• Check the length of the introductory period and the interest rate that applies after it ends.
• Be confident you can pay off the debt within the 0% or low interest period or you’ll then start building up interest on your balance. Interest rates are often a lot higher after the introductory period finishes.
• Make sure the balance transfer fee doesn’t outweigh the savings you’ll make on interest. Transfer fees can typically range from 2-4% of the amount transferred, which can really add up on larger balances.
• Avoid spending on this card, as the promotional interest rate usually only applies to the balance you’ve transferred and not new spending (though some cards offer 0% on both balance transfers and purchases).

Find out more: compare balance transfer credit cards.

2. You want to buy things interest-free

0% purchase credit cards offer a fixed 0% interest period on spending. This can be ideal if you need to spread the cost of a larger item over time without paying interest.

Just remember that:

• Even though you’re not being charged interest, you still need to meet the minimum monthly repayments or you could damage your credit score and lose your 0% rate.
• Once your promotional interest-free period ends, you’ll start getting charged interest on any remaining balance. This interest rate is usually a lot higher, so aim to clear the debt entirely before this kicks in. If this isn’t possible, consider shifting the debt using a 0% balance transfer card.
• You could be charged fees for withdrawing money, spending on the card while abroad, or going over your credit limit.

Find out more: compare 0% purchase cards.

3. You want to build your credit score due to poor or no credit history

A credit builder card is specifically designed to help those with no or poor credit history. These cards have lower eligibility criteria and help you build a positive credit history when you consistently make payments on time. Using one shows lenders that you can be trusted with credit, even if you’ve previously struggled with debt problems or never borrowed before.

With a credit builder card, keep in mind that:

• They’re aimed at people who lenders see as higher risk, so can often come with stricter conditions. Make sure to read the T&Cs carefully.
• You might only be offered a small credit limit, usually between £100 and £1,500.
• Interest rates can be much higher than other types of cards, so always pay your balance in full each month to avoid building up interest.

Find out more: compare credit builder cards

4. You want to earn cashback or rewards when you spend

A rewards credit card or cashback credit card can be a great option if you pay off your balance in full each month and want to get something back for your spending. These cards offer cashback, points, or travel rewards on the things you buy. You can then redeem these on shopping and flights. You could also get added perks such as insurance or access to exclusive events.

Before choosing a rewards or cashback credit card, it’s important to know that:

• These cards often have a higher interest rate than other credit cards. If you’re not clearing your balance each month, you could end up paying a lot of interest.
• Some cards will charge a monthly or annual fee which reduces the net value of your rewards or cashback.
• There may be restrictions on how and when you can use your rewards.
• You might only get sign-up bonuses such as points or cashback after spending a minimum amount.
• You should avoid spending more than you’d planned in order to earn more points or rewards, as this builds up unnecessary debt.

Find out more: compare rewards credit cards or cashback credit cards

5. You want a credit card to use when you’re abroad

A good travel credit card usually offers excellent exchange rates on spending, no foreign transaction fees and allows fee-free cash withdrawals (usually up to a set daily limit). Some also offer rewards such as air miles or cashback on overseas spending.

With a travel credit card, you’ll need to:

• Pay off the balance in full each month or the interest you build up could overshadow any savings on foreign transaction fees and exchange rates.
• Check whether there are limits on the amount of cash you can withdraw, or number of withdrawals you can make per day
• Watch out for any hidden charges or fees for using the card
• Let your lender know about your travel plans to help avoid your card being blocked.

Find out more: compare travel credit cards

6. You want to transfer an existing balance AND spend interest free

A 0% balance transfer and purchase credit card (also known as a dual credit or combined card) combines the best of both worlds, offering 0% interest on both balance transfers and new purchases. These cards let you manage existing debt and buy new things without paying interest for a set period. They sometimes also offer extra perks, too.

With a balance transfer and purchase card, be aware that:

• The 0% interest period on balance transfers might be different from the period offered on new purchases. Make sure you’re clear on when each 0% period ends to avoid paying interest unnecessarily.
• You’ll need to pay a transfer fee to move your balance across from another credit card.
• If you miss a payment, you could lose your promotional interest-free rate. You’ll then be switched to the lender’s standard rate which is often much higher.
• There could be added costs such as cash withdrawal fees, foreign transaction fees, and charges for spending above your credit limit.

Find out more: compare 0% balance transfer and purchase credit cards

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