Credit cards are palm-sized rectangles of plastic - or sometimes metal - that allow you to borrow money as and when you need it to pay for goods and services.
You get an agreed maximum credit limit you can borrow at once and there's a minimum monthly repayment, but are free to borrow or repay anything you like within these limits.
Credit cards work by linking the physical card, or account number for online spending, with the borrowing facility - that means when you pay with a card, it's your provider that pays the cash to the merchant.
On a technical front, this is done when the merchant's payment terminal reads your account information from the chip or the magnetic strip on your card, then sends a request to your provider to check your account is large enough to cover the purchase.
When buying online, you need to enter your account details yourself, along with your security code, to make a purchase - although many services will then remember that to speed things up next time.
Our editors have picked out three of our best credit card deals we have on offer
Representative example: The standard interest rate on purchases is 21.9% p.a. (variable), so if you borrow £1,200 the Representative APR will be 21.9% (variable).
“This card hits the sweet spot with a lengthy interest free period and no fee for balance transfers. It offers cashback abroad, and real rates, so the APR you see is the one you get if approved. You can also get up to 15% cashback with select retailers.”
Representative example: The standard interest rate on purchases is 22.9% p.a. (variable), so if you borrow £1,200 the Representative APR will be 22.9% (variable).
“Get flexibility with an added bonus with this dual credit card. Not only do you get over 20 months interest free on both balance transfers and purchases, but you can get £20 cashback if spend over £250 within the first three months.”
Representative example: The standard interest rate on purchases is 21.95% p.a. (variable), so if you borrow £1,200 the Representative APR will be 21.9% (variable).
“Get two for the price of one with this dual credit card. With two years interest free on both balance transfer and purchases, you get the flexibility you need whether it's to pay off debt, or spread the cost of purchases. If you need to, you can do both.”
Balance transfer cards let you to move debt from one or more cards to a new one and pay it off at a lower interest rate. Many offer lengthy interest-free periods, so all your repayments go towards paying off your debt, rather than interest, so you'll pay off your balance quicker and save on interest at the same time.
0% purchase cards offer lengthy introductory interest-free periods, so you can make large purchases with your credit card and spread the cost over several months. As long as you pay off the full balance before the end of the interest-free period, you won't pay any interest.
Money transfer cards allow you to move money from your new card directly to your bank account. You can then pay for goods and services using your debit card or withdraw cash from an ATM. These also often have long interest-free introductory periods, so you you can spread the cost of your spending over several months without paying interest.
Credit building cards are aimed at individuals with no previous history of borrowing or those with poor credit histories. These cards are easier to get and usually come with high interest rates and low credit limits.
These cards are aimed specifically at regular travellers. They don't charge foreign transaction fees, so you can use them even when you're travelling abroad. If you often find yourself in Europe or further afield, a travel credit card could save you a lot of money.
Rewards credit cards offer you bonuses for using them. The rewards tend to vary from card to card, but some of the most common rewards offered include vouchers or in-store points and air miles. Some provide cashback every time you spend on the card. Many of these charge annual fees and typically have high APRs.
The reason you're looking for a credit card will go a long way in helping you decide which type of card you should compare. Different types of cards are designed for specific purposes, whether you want to pay off debt, make a large purchase, build your credit score, or earn rewards. Be sure about why you want a credit card before you compare credit cards.
The interest rate, or APR, determines how much it'll cost you to borrow with your credit card. When comparing APRs, the main thing to consider is whether you plan to pay off your balance in full every month. If you do, a card with a higher APR might be fine. But if you're more likely to carry a balance, you’ll want the card with the lowest APR you can get – even generous rewards won't make up for the interest accrued with a high APR.
Most credit cards also charge common fees such as annual fees, balance transfer fees, cash advance fees, foreign transaction fees, and others. Whether these fees will affect you depends on how you use your credit card. For example, if you don’t plan to do a balance transfer, you could consider a card that charges extra for that. Or, if you plan to do a lot of international traveling, a no foreign transaction fee credit card might be a better choice.
Many credit cards may offer additional benefits like mobile phone insurance, rental car insurance, airport lounge access, and roadside assistance, to name a few. But it’s not uncommon for extra benefits to come with a higher annual fee. When comparing a credit card’s extra benefits, consider your needs. Free airport lounge access sounds great, but it might not be worth it if you're only traveling once or twice a year.
Find out more in our guide to managing your credit card.
To be eligible for a credit card in the UK, you must be at least 18 years old and a legal UK resident.
The first decision providers make is whether to offer a credit card at all. Then they figure out how much to let you borrow - your credit limit - and at what interest rate - the APR.
For this they consider three factors:
CardFinder is an eligibility tool that matches you with the credit cards you're likely to get based on your needs and circumstances. It uses a 'soft search' credit check so your credit score will not be affected.
It's a good idea for most people to use CardFinder because it ensures that you only apply for the cards you can get, and thus avoid hurting your credit score from rejected applications.
James has spent the past 15 years writing and editing personal finance news, specialising in consumer rights, pensions, insurance, property and investments - picking up a series of awards for his journalism along the way.