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Credit Card Guide

Credit cards are a really convenient method of payment. What's more they enable you to spread the cost of purchases if you can't afford to pay for them in full.

So that means that you can spend now and pay back later when you can afford to do so.

However, with hundreds of different cards to choose from, even for people with bad credit so how do you know which is right for you?

What type of card is best for me?

There isn't a single credit card that is perfect for every individual so before you apply think about how you'll use the card:

Are you looking for a card to spend on and if so will you be able to clear your balance in full each month?

Maybe you've already got an outstanding debt on another card and are looking to make a balance transfer, but do you want to spend on the card as well? These are all vital questions which will help identify the best card for your needs.

How credit cards are used

There are basically three ways of using a credit card: purchasing goods from stores or over the internet, moving an outstanding debt over from another card, usually because of a reduced interest rate and withdrawing money from a cash machine.

Providers tend to charge a different rate of interest for each, and then implement a payment system whereby the cheapest debt is cleared first, leaving you accruing interest at the highest rate.

If you plan to use your credit card for more than one purpose the order of payments is really important - it is also often referred to as the payment hierarchy.

Top tips

If at all possible, try and pay more than the minimum - otherwise it could take years to clear your debt.

It's a good idea to pay by direct debit - that way you will always pay on time and avoid incurring a late payment fee.

It may be tempting, but try not to use a credit card to withdraw cash from an ATM - you'll probably be charged a higher rate of interest than on purchases and be charged a withdrawal fee.

Keep an eye on your spending and make sure you stick within your agreed credit limit.

It's well worth using a credit card for purchases of £100 or more because you have greater protection than if you pay with cash or a debit card. Under Section 75 of the 1974 Consumer Credit Act credit card issuers and retailers take joint responsibility for faulty purchases. This applies to purchases between £100 and £30,000. If the retailer goes bust or the goods are faulty when they arrive you can claim a refund from the card provider.

Glossary of terms


This stands for Annual Percentage Rate. Any firm that lends money is required by law to quote the APR. Introductory rates do not include arrangement fees you may be charged and also don’t reflect any higher rate of interest that your borrowings will ultimately revert to.

The APR takes into account the interest on a loan plus and additional charges making it easier for you to compare products. In general, the lower the APR the better the deal.

best balance transfer credit cards

Balance Transfer

Balance transfer rates are applied to existing card debt that is being moved from one issuer to another or a consolidation of other debts. These rates tend to be lower than standard rates and apply to the debt transferred or consolidated for a specified term or until it is repaid in full.

Credit Card

Credit cards are a form of borrowing used to purchase goods and services, to obtain cash advances and for consolidating debt.

Direct Debit

This allows an organisation to take money directly from a persons bank account

Minimum payment

The amount you must pay each month to keep your account in order

Interest-free period

The time between when you buy something on the card and the date when you must pay your monthly bill. This can be 50 days or more and is interest-free. So if you settle your bill in full every month, it's free borrowing.

Promotional Rate

A rate that is applied to your account until a given expiry date. Thereafter it will revert to the rate applicable to your account at that time.

what credit card is best for me?