Choosing the Right Credit Card

by : Marcus Henry



In the UK finance markets there are literally hundreds of credit cards available. While a credit card can be useful if used correctly choosing the wrong type of card can be a costly mistake. There are many sites online that help you to compare credit cards but your first port of call should be to research and educate yourself on the options available. In this article we will look at the different types of credit cards on offer and how their suitability differs depending on your personal circumstances.

If you are in the fortunate position of being able to clear your credit card bill every month then there are several options open to you. The most important thing to check is that the credit card offers an interest free period, most cards offer an interest free period of around 45 days, although the period will differ slightly for each credit card company. If your card offers this interest free period and you can afford to clear your balance every month the interest rate of your card is largely irrelevant as no interest will accrue. In this case you should look at credit cards that offer cashback or a loyalty points scheme to actually get some benefit from using your card.

If your credit card is used regularly but you sometimes carry your balance over from previous months your best option is to go for credit cards with lower standard rate. As you will be aiming to clear the majority of your balance on a regular basis the interest will not build up too much. You should also look into the possibility of obtaining cashback or loyalty points but the low standard rate is the priority, any interest free period on purchases is also a benefit. If you fall into this category be wary of letting too much debt build up, dedication to clearing your balance as regularly as possible is essential.

If you are unable to clear your credit card balance on a regular basis then interest on your debts is going to build up. In this scenario a card with a low standard rate is important to prevent interest building up too quickly. If you are changing your credit card you should use a and seek out a card that offers an interest free period for new purchases and balance transfers. Many cards offer interest free periods of between 6 and 12 months. Although a fee of around 2.5% may be payable to transfer a balance you will still be saving money in the long term. If you fall into this category avoid making only the minimum repayment each month as this will nullify the benefit you receive in your interest free period

If you have debts on credit cards you are trying to pay off you should look to move your balance to a new credit card with a long interest free period on balance transfer, preferably 9-12 months. If you can combine this with making your monthly repayments as large as possible you can start to chip away at your debt without additional interest building up in the introductory period. While going down this route it is vital to avoid putting more debt on the card if possible. If this is not possible you should look for a card with an interest free introductory offer on purchases as well as balance transfers

If your personal circumstances have resulted in a poor credit rating which you want to rebuild you can look to acquire a bad credit credit card. These tend to have higher interest rate 29.9% is not uncommon. Taking out one of these cards can be the first step to rebuilding your credit history but using the card responsible is paramount. Your credit limit will usually be quite low, no more than ?500 in most cases. By clearing your balance each month you can start to rebuild your reputation with the banks.

As this guide has shown there are many credit cards out there and some will suit you more than others. When you are looking to make sure you do your research to avoid making a big mistake.