APPLYING for a credit card can be confusing with so many options on the market.
Here, we explain where to look to get the best credit card deals and how you go about getting the right one for you.
Unfortunately getting a credit card isn’t just as simple as getting one card that will suit all your needs.
There are several different types depending on what you need the card to do, each one with its own benefits and downsides.
Remember though, the best credit card offers will go to customers with the best credit ratings and who pass the affordability checks.
We explain how to apply, why you might want to choose a different card for your situation and what the best deals are on credit cards at the moment.
What is a credit card?
A credit card is like a loan from a bank or building society.
Instead of receiving a load of cash into your own bank account, you are approved a line of credit based on your finances and credit rating.
This can be used on a credit card in a number of ways such as paying off old balances, spending or transferring money.
You will get a bill each month that you need to repay and there are likely to be charges if you don’t settle it in full.
What can you use a credit card for?
There are several different types of credit card depending on how you are spending or using the money.
- A purchase card allows interest-free spending
- A balance transfer card lets you clear old debt
- A money transfer card can payoff account overdrafts
- A cashback card can pay rewards on your spending
- A travel credit card can provide interest-free purchases and cash withdrawals when you are abroad.
Some cards will offer a combination such as interest-free spending and balance transfers.
What type of credit card is best?
The best credit card for you will depend on your needs.
An interest free purchase credit card can be a great way to spread the cost of a big purchases, such as a holiday or a new kitchen.
If you get a card with a long interest free period you can space out your payments gradually without having to pay any hefty interest charges.
The trick is to try and clear your balance before the 0% interest period ends so that you can avoid any fees.
A cashback credit card can also be an effective way to earn money while you spend.
It rewards you for your everyday spending – and you can get a tidy boost to your bank balance.
These cards offer cashback when you spend using the card, but be warned companies offer these cards because they want you to spend.
If you don’t repay your balance in full every month you will very quickly wipe away any of the cashback you have earned.
We have a guide on cashback credit cards and where to get the best deals here.
If you are trying to clear an existing debt you could consider getting a balance transfer credit card.
These cards allow you to go for long periods with out paying interest on what you owe.
So you can transfer over your existing debt onto a balance transfer card and pay it off without any interest.
You can save potentially thousands of pounds if you use a balance transfer card properly.
But be careful, as soon as the 0% period is over you will have to pay high rates again, so make sure to pay off your debt in the interest free period.
Some of these cards will also charge you for transferring over your debt.
For more information on balance transfer cards, you can read our guide here.
You can also clear your overdraft using an interest-free money transfer credit card.
This helps you avoid overdraft fees, get back in credit with your current account provider and make interest-free repayments on the debt.
If you are going on holiday or travelling abroad regularly a travel credit card can help you save while you get a bit of sun.
Banks will often charge you fees for spending or withdrawing money abroad, a travel credit card won’t charge you for spending while you are on holiday.
Though these cards will usually charge for withdrawing money when you are out of the country.
Just because you’re using your plastic on holiday – doesn’t mean the usual rules don’t apply.
Always make sure you clear your balance each month – if you don’t, the interest charges you’ll incur will outweigh any savings you make by using it in the first place.
And don’t be tempted to go overboard with your spending just because you’re having fun in the sun.
For more of the best deals on travel credit cards you can read our guide here.
How do you get a credit card?
You can find the best credit card deals either directly from a bank or building society or search and scrutinise offers using a comparison website.
The first thing you need to do if figure out what kind card you are going to need, such as if you require top credit cards for spending or you need to payoff debts with a balance transfer.
Your credit score determines how reliable you are when it comes to borrowing money.
The better your credit score the more likely it is that banks will accept you for the best deals, as they only have to provide their best credit card offers to 51% of applicants.
When you apply for a credit card your bank will check your credit score to see if you suitable for the deal they are offering.
If you have a bad credit rating the bank may not want to lend you money in case you can’t pay it back.
Avoid applying for loads of different deals as each application makes a mark on your credit file, and may end up hurting your chances of getting the best credit card deals.
Comparison websites can often do a soft search that won’t affect your credit rating but will tell you which deals you are most likely to be approved for.
Once you have decided on the card you are after just fill in the online form on the credit card company’s website.
Try to be as honest as possible with your credit details.
If your application is declined it might be worth asking the bank for a copy of your credit file, to see why it is that you weren’t accepted for the credit card.
If you are accepted can take a week or two for your card to arrive.
What are the pros and cons of credit cards?
A credit card can be an effective way of clearing debts or making a big purchase and spreading the repayments.
You can consolidate several credit card debts into one monthly payment using a balance transfer, which gives you more time to focus on clearing the balance without worrying about interest charges.
Alternatively, an interest-free purchase card is effectively like a loan to pay for a big item such as a new kitchen or car.
Keeping up with repayments can also build your credit score as it gives you a track record of managing debt.
It requires discipline though as if you miss payments or don’t pay the full balance, you could end up paying high rates of interest known as the annual percentage rate (APR).
The APR can be as high as 20% or more if you are deemed a credit risk.
Even if you have an interest-free credit card, it can be worth making more than the minimum repayment and clearing the balance each month – as the full debt will be owed at the end of the deal term, which could leave you with a higher bill.
Additionally, an interest-free card will move onto a pricey APR once the deal period ends, so it is important to clear your balance beforehand.
An easy way to do this is to setup a direct debit that pays off your credit card bill each month.
Remember, the APR will also be charged on missed payments even in an interest-free period.
Check what you can use your card for as there may be hefty fees for overseas spending or cash withdrawals.
Some cards may also have charges such as for balance transfers or cashback cards often come with an annual fee.
Also, avoid lots of applications at once and do a soft search through a comparison website or directly with a provider to check your chances of being accepted.
This is because lots of applications, and rejections, can harm your credit score and make it harder to get loans and credit cards in the future.
What is the easiest credit card to get approved for?
The better your credit rating, the more likely you are to be approved for top credit cards.
You can find the best credit card deals for your situation by searching on comparison websites or direct with a provider.
Use a soft search and eligibility checkers to see the products you are most likely to get accepted for.
You may not always get the deal that is advertised and instead could get offered a shorter interest-free period.
There is no requirement to accept what is offered and you are free to shop around, but remember that too many applications can damage your credit score.
If you can wait, it may be worth taking steps to improve your credit score so you can get a lower rate, larger balances or a longer interest-free period at another time.
There are also cards for those with poor credit that can help build up your score.