What are the different types of card on offer?
Getting a new credit card can be a minefield, there’s a lot of them and they all sound great – but which one’s going to be right for you? You’ll need to be honest with yourself and think about how you manage your money because there’s no point having a super duper credit card with the greatest rewards in the world if you’re in the habit of not paying off your bill in full each month. Because any rewards you do get will be swallowed up in the interest you end up paying back.
Balance transfer cards – If you’ve got an existing credit card debt, it’s worth comparing the market to see if you can find a card that offers better repayment terms. There are a range of cards offering 0% on balance transfers which means you won’t be charged interest on your outstanding balance every month (the one that you transferred anyway!) This can help you pay back what you owe quicker and save you money in the long term. But watch out for balance transfer fees as you might have a one off charge for moving the balance.
Reward cards – These offer you rewards such as store vouchers, air miles or days out. Some are specific to a store so if you always shop at the same places it’s worth considering one issued by your favourite high street haunt as you could be able to earn points or vouchers to use instore.
Cashback cards – These literally give you cash back on what you spend, so you’re incentivised to spend more – but that shouldn’t be an excuse to go mad. Your cash reward is usually given back to you annually and often taken off your outstanding balance .
0% on new purchases – This means you can buy stuff without paying interest on the outstanding balance for a set period of time. For example, if you want to buy a new pair of shoes but know you can’t pay off the balance until your bonus gets paid in a few months then you won’t be charged interest while you wait. Just remember, you still have to make the minimum monthly payment and the interest free period is usually fixed so don’t forget to pay it off before the interest free period ends. You can also find cards that offer 0% on new purchases and balance transfers.
Bad credit cards – These haven’t been consigned to the naughty step, they’re designed for anyone with a poor credit history and used properly they can help you get back on track when it comes to credit.