What credit card is best for you?
The world of credit cards can be a confusing maze. Each credit card comes with varying terms and conditions, which means that you should do your homework to find the right card for you before you sign on the dotted line.
What type of credit card user are you?
- I have an outstanding balance
- I have some big purchases to make
- I always clear my balance
- I'm travelling abroad
- I want to help a charity
"I have an outstanding balance!" 0% balance transfer credit card
If your credit card statement is outstanding and you struggle to make more than the minimum repayments, you're probably being charged at least 18% in interest. However, you can cut this cost by switching your balance to a 0% balance transfer credit card.
- DO pay off as much as you can over your set period once you have set up your balance
- DO make a note of when your 0% period ends. Once you reach this date, your balance is liable for interest, so think about switching your balance to another card before it ends.
- DON'T ever make new purchases on a 0% balance transfer card, because all of your payments go towards reducing your cheapest debt first.
- DON'T continually switch your balance, because this will affect your credit score.
Credit card best buys - 0% on balance transfers
"I have some big purchases to make!"- 0% on purchases credit card
If you have a big purchase to make, or have an expensive month coming up (like Christmas), a 0% on purchases credit card will let you spread the cost of your payment over anything up to 12 months, without the worry that your balance will grow.
- DOpay off as much as you can over your balance, so you're not hit with a whopping bill once your 0% period ends
- DO make a note of when your 0% period ends. You may find that you'll need to transfer your balance to a balance transfer card.
- DON'T just make the minimum repayments. Work out how much you'll need to repay back on average over the period.
Credit card best buys - 0% on purchases
"I always clear my balance!"Cashback credit card
If you're a savvy credit card user and are always able to pay off your balance in full, each and every month, there are some real benefits out there.
- DO think about a cashback card, which rewards you with a percentage back for every purchase you make, with some credit card providers currently offering 5% for the first three months, then up to 1.5% thereafter
- DON'T be encouraged to spend more than you should!
Credit card best buys - cashback
Credit best buys - rewards
"I'm going overseas or on holiday!"Foreign usage credit card
If you're jetting off abroad, using a standard credit card when you get there can mean a nasty surprise bill waiting for you on the doormat when you get home. Most holidaymakers are blissfully unaware that their credit card providers charge a foreign usage charge, on top of the exchange rate, typically around 3%.
- DOopen up another credit card with a provider that doesn't make this foreign usage charge.
- DON'T withdraw cash on your card, as you'll be liable for a further charge of 3%, as well as a foreign usage charge.
Credit card best buys - foreign usage
"I want to help a charity!"Ethical credit card
If you want a clear conscience when you spend, there's a wide variety of charity and ethical credit cards out there for you to choose from. They will usually make a donation, on your behalf, to good causes. For example with the Co-op's "think" credit card, half an acre of Brazilian rainforest is purchased and protected in your name when you transact on the card for the first time, plus a contribution of 25p will be made to Cool Earth for every £100 spent on the card.
- DO your homework, because some credit cards make very small contributions.
- DON'T just respond to a charity mailer, "Moneyfacts it" by checking how good the credit card is first
Credit card best buys - ethical
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