Credit cards are a form of borrowing money. You can use them to buy things the same way you use your bank's debit card. However, when you spend on a credit card, rather than spending your own money, you're borrowing from the card provider. You can then choose to pay off your balance immediately or at a later time. If you choose to pay it off later, you could be charged interest on what you owe.
As a general rule, credit cards are best suited for borrowing small amounts, usually between £1,000 and £5,000.
When looking for the best credit cards, it's important to know what you're borrowing for. For example, you could reduce debt and interest payments, make a large purchase or get cashback on your everyday spending.
You can use our comparison table above, which lists credit cards of every type and their interest rates, and compare specific types once you have worked out what you need.
There are several types of credit cards to choose from
0% purchase cards
Purchase credit cards offer introductory interest free periods where you aren't charged interest on your spending. This can range from a month to over two years depending on the provider.
These are useful if you want to make a large purchase, such as new furniture for your home or a holiday. It's important to clear the balance before the interest free period ends, otherwise you will be charged interest on the remaining balance.
0% balance transfer credit cards
Balance transfer cards help you move debt from one credit card to a new one. You can use this to manage existing debt, or combine debt from several credit cards, onto one card. These are a useful way to avoid paying interest on your debt, but it's important to be aware that some providers may charge a fee to transfer your balance.
Money transfer cards
Money transfer credit cards help you move cash from a credit card to your current or savings account. Often these cards come with interest free introductory periods. You can use these for clearing an overdraft or to get a cash loan on which you don't pay interest for a period of time. Make sure you know when the interest free period ends because you'll be charged the lender's standard variable rate, which can be much higher.
Cashback and rewards cards
Cashback cards allow you to earn money back on your credit card spending. Reward credit cards award you points on your spending that can be used for air miles, supermarket loyalty points, shopping vouchers or hotel vouchers.
These are handy for those who have good credit histories and tend to pay off their credit card balance every month. This This means you won't be charged the interest rate and allows you to collect air miles or loyalty points at your favourite airline or retail outlet.
Credit building credit cards
People who have bad credit or no credit history are more likely to get accepted for credit building credit cards. These cards generally offer lower credit limits and higher interest rates, but if you use them cautiously and make repayments on time, they can help you improve your credit score.
Given the variety of credit card offers available, it's always important to make sure you read the small print to ensure there are no additional costs or fees that you're unaware of.
What are the benefits of choosing a credit card?
Improve your credit score: A credit card is the easiest way to build your credit score if you don't have much of a credit history, or you want to go from a poor score to a better one. When you use a credit card responsibly, i.e pay off you balance on time and don't miss any payments, it improves your credit record. That good behaviour is reported to credit rating agencies who record it on your credit file. This can be helpful in the future if you're considering buying a car or getting a mortgage.
Protection against fraud: A credit card can act as a firewall that protects you from fraudulent charges. If you notice any unauthorised charges on your credit card, you can report them to your lender and, in most cases, you won't have to pay the charges. This is not always true for debit cards, or if someone gets hold of your bank account details.
Rewards: If you use your credit card responsibly, it's a good way to rack up air miles, cash back, or loyalty points with your favourite retailers.
Extras: Many credit cards come with extra benefits that can come in handy, such as travel insurance, or airport lounge access. These might not seem like much at first, but can end up saving you hundreds of pounds.
When you compare credit cards there are a few things you should consider
Among the features you should consider when looking for a credit card include:
Fees: These are the costs of owning a credit card. These could come in the form of an annual fee - which can range from £0 to hundreds of pounds depending on the credit card type - or other fees such as late payment fees, or over limit fees.
Interest rates: Interest is the price you pay for borrowing with a credit card. Credit cards are unsecured products, which is why they tend to have higher interest rates than other forms of borrowing.
Interest free period: Many credit cards offer interest free periods where you are not charged interest on your spending, as long as you pay the minimum balance by the due date of every billing cycle. The interest free period can range from a month to over two years depending on the lender.
Rewards: Many cards offer rewards in the form of cash back, air miles or loyalty points, which you can earn based on your spending.
The top credit cards are usually those that have low rates, long interest free periods, and low fees. The best card for you depends on why you're looking to borrow and how you intend to use a credit card.
Try our free credit card eligibility checker
Our free and simple eligibility checker can help you find the credit card that you're likely to be accepted for without affecting you credit score.
Using our eligibility checker will not leave a mark on your credit record because it uses a "soft search" credit check.
Our eligibility tool can save you time by not applying for cards that would reject you.