How to choose the best credit card for you
Choosing the best credit card can be difficult. That’s why we’ve put together this guide. It covers how to choose the best card for your finances, how to filter out unsuitable cards, and what you need to apply.
Estimated read time: 4 mins
What should you consider when choosing a credit card?
If you want a new credit card, or your first one, there are a lot of factors to consider to find the best one for you. These include:
Minimum repayments: With credit cards, you must pay back a minimum amount each month and this amount varies by provider. It’s a good idea to compare providers so you know how much you need to repay.
Annual Percentage Rate (APR): The rate of interest that’s added onto the balance, if you don’t pay off your full statement balance. Sometimes, cards with higher APRs may be the only ones available to you – for example, if you’re a new borrower or have bad credit. But it might be worth shopping around to see what different providers offer.
Annual fees: Some cards charge a yearly fee for using them. So check the costs and benefits of a card when comparing fees before applying.
Introductory interest rates: Some cards offer low or zero per cent interest rates for a short period when you sign up. So, if you spend responsibly and manage your repayments, you might avoid extra charges or interest. However, this isn’t a free pass to spend as much as possible. These rates often have strict terms and conditions to access the lower introductory rates.
Loyalty points or rewards: Many cards offer rewards, like cashback on certain purchases. They may also offer vouchers and point schemes like Avios points. You can claim these when spending in shops or buying certain products and services. If this is a big part of your credit spending, it’s worth shopping around to see if the rewards are right for you.
What the card is for: Different credit cards have different functions. For example, balance transfer cards help you manage debt, by combining your other credit card balances into one. While other credit cards are specifically for personal or business use. Each type of card has a specific use, so it’s worth checking your financial situation to find the best one for you.
Which type of credit card is best?
The type of credit card that’s best for you depends on your financial situation.
If you want to combine your existing payments into one card to help manage your debts, a balance transfer card could be better than a standard credit card.
If you’ve never had a credit card or used credit before, consider a credit builder credit card. It’s a good option to start your credit journey or help build or repair your credit score.
What else should you be aware of when getting a credit card?
Before committing to a credit card, here are a few other important things to take note of:
Fees for spending abroad
Using your credit card abroad usually incurs a currency conversion fee for each transaction. On average, this is anywhere from 2.5% to 3% but can be as high as 6%. Some cards offer lower fees than others so always browse the market for the best deal.
Accessing cash with credit cards
Depending on how your credit card works, you may be charged a fee for withdrawing cash abroad. If you need local currency, it’s worth shopping around for the best exchange rates to help avoid fees.
Impact on your credit score
If you spend and don’t make timely repayments, it can impact your credit score. Without a good credit score, it may be harder to apply for mortgages, low-interest credit cards, loans, and even things like phone contracts. So, it’s a good idea to monitor your spending and make repayments on time.
How do credit cards work?
Credit cards give borrowers an agreed amount of money to spend. The customer must then repay their borrowing over a period, including interest. When you borrow on a credit card, you must repay a minimum amount each month or you’ll likely be charged extra fees – and this could affect your credit score too. If you pay the credit card balance in full before the due date on your monthly statement, you won’t be charged any interest.
How to get a credit card?
Firstly, it’s important to consider factors like interest rates, credit limits, annual and additional fees, and what you need the card for. After that, you should browse the market for the best options.
After finding the right card(s) that meet your requirements for what you need, check your eligibility. This involves submitting details to the credit card provider so they can perform a background check. These background checks come in two forms:
- Soft credit checks review your eligibility without affecting your credit score.
- Hard credit checks are more thorough and may impact your credit score if you get too many in a short space of time.
When you’re happy with your choice of card, make sure you’ve reviewed all the fees and terms and conditions. After that, if you apply and you’re approved, you’ll get your card in the post, and you can start using it to help with your finances.
Over 5 million customers have already been accepted for a Vanquis Card
Frequently Asked Questions
How many credit cards should I have?
There’s no correct number of credit cards to have. This depends on your finances and how you manage your debt repayments.
If you’re struggling to pay your credit card debts, a balance transfer card could help. It lets you combine multiple credit card balances into one balance and one payment, so you don’t have to track and manage all your existing card repayments.
What are the three major credit card networks?
The three major credit card networks are Mastercard, Visa and American Express.
Does it matter what type of credit card you have?
Yes. Different credit cards serve different purposes. So, it’s important understand what type of credit card you need.
Some credit cards are better suited for personal spending. This includes credit builder credit cards, cards for bad credit, and standard purchase credit cards. Others serve a secondary function, like balance transfer cards, which allow customers to combine their credit card debts.
Because credit cards have different uses, interest rates and credit limits may vary between card types.
It can be tricky to make sure you’re choosing and using the card that’s best fitted to your situation. So, it’s worth reviewing your finances and only applying for the credit cards that suit you. This can help you avoid paying unnecessary fees and costs.