The next step is to think about what type of credit card is right for you.
If you are a student, a student credit card is probably your best bet. This type of card is designed for people in continuing education who have not yet built up a significant credit history and are not eligible for traditional credit cards.
Credit limits are usually lower than standard cards – usually between £ 500 and £ 1,500 – and interest rates are higher, so it’s important to make sure you pay off your balance every month.
On the flip side, if you’re about to start your working life and don’t have a lot of credit history, you might want to consider a credit card builder. This type of card is designed to help you improve your credit score over time, and again, credit limits are usually lower than standard credit cards and interest rates are higher.
Once you start building up a credit history and your credit score has increased, you may be able to apply for more competitive credit cards.
Some of the options to consider include:
0% credit card purchase – allows you to spread the cost of your expenses over several months without interest. Keep in mind that the interest will show up once the 0% deal ends.
0% balance transfer credit card – allows you to transfer existing credit card or storage card debt and avoid paying interest for several months. There is usually a transfer fee to pay (often around 3% of the balance) and interest will be charged after the transaction ends at 0%.
0% money transfer credit card – allows you to transfer cash from your credit card to your bank account and then repay it in the same way as a normal credit card balance. You can use that money to pay off whatever you want, although a popular option is to pay off the overdraft or the loans. Again, there will usually be a transfer fee to pay and you will need to clear the balance before the 0% offer ends to avoid paying interest.
Low APR credit card – some credit cards offer a low interest rate for life, rather than an interest-free period, so you won’t need to pay off your debt within a specified time. You can often use these cards for purchases and balance transfers.
Credit card abroad – this type of card is ideal if you regularly travel abroad as you will not be charged any transaction fees abroad. Some cards also let you avoid paying fees for cash withdrawals, but you will still be charged interest from the time you receive your money – even if you pay off your balance in full that month.
Rewards credit card – some credit cards offer rewards such as airline miles or loyalty points at certain retailers or supermarkets, while others offer cash back. This type of card is usually best if you can afford to pay off your balance in full each month, as they often charge high interest rates.