Credit Card Advice
Your needs	Paying off	Foreign spending
What to look for	Payment protection	Small print
Credit card tips	Flexible borrowing	Emergencies
Cash Back

What to look for...

The options you have, when choosing a credit card, depend on your needs and how and what percentage of your balance you are likely to pay off each month.

If you pay off the full amount of your bill each month then the interest rate won't apply to you so instead look for loyalty point options, air miles and cash-back rewards. Also you will be wanting a credit card with no annual fee.

If you are looking to pay off debts then a credit card may not be the answer, so try looking at personal loans, which would be a better solution in the long run. Although for short term loans a credit card may be a wise option as they can offer much more flexibility than a loan, and some lenders will offer low interest deals. Search for low interest credit cards>>

 

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Interest Free Period

If you repay the balance in full each month, you will not usually pay any purchase interest, unless you have a low-interest card which charges you interest from day 1. Paying the balance in full effectively gives you up to 59 days' (this varies between credit card issuers) interest free credit; this is also known as the grace period.

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Purchase APR Rates

The purchase APR rate is what you pay on balances from goods you have bought on the credit card. It comes into effect as soon as the transaction is made, meaning that if you don't pay off your full balance then yuou will be charged this interest.

The purchase APR rate is where the credit card companies make most of their money and can be avoided only if you pay off your balance in full each month. See our paying off tips for more details.

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Balance Transfer Rates

Often credit card companies offer very attractive rates on balance transfers for an indtroductory period and some have very good rates for the full life of the balance transfer. In the latter case it is advisable to use the credit card for the purpose of only paying off the transfer.

If you have transferred an existing debt onto your credit card, each repayment will come off the balance transfer before the balance for purchases etc. In this case it is advisable to choose low purchase APR and low balnce transfer rate. More on balance transfers>>

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Cash Advance Interest Rates

It's not advisable to use your credit card for cash advances, but if you do, be warned; issuers charge a higher APR on cash withrawals than the standard APR, becuase of the higher credit risks. The cash advance service also carries a service charge of 1-2% which is increased to up to 2.75% when used abroad.

Creditcard.co.uk advises the avoidance of cash advances, especially when abroad, unless special rates similar to balance transfer offers are available. More on using your cards abroad>>

See our emergency fund glossary guide for tips on how to avoid needing to make cash advances.

See our Nationwide page for more information about fee free, or low fee cash advances.

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Cash back rewards and other incentives

As long as your credit card gives an interest free period then you will pay no interest when paying off your balance in full each month. When making a purchase the retailer has to pay their credit card clearing companies a cut of each sale and cash back cards enable them to share a small sum of it with you. Cards that offer rewards and incentives range from straightforward cash-back like American Express Blue, to loyalty points for Tesco and Sainsbury's or membership reward programs like Air Miles or American Express Green

Money saving tip: Beware that when you are using cash back cards, you are only getting a 1% reward, and that you still have to shell out the other 99%! Never buy anything just to get the rewards - whether on your credit card, or using supermarket loyalty cards.

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Additional services

Some cards offer a huge range of additional services beyond ability to make payments around the world. These may include cardholder protection, free insurance, or a price match value promise. Other cards will have special offers which give you discounts on associated services, such as a travel insurance policies, currency exchange, utility bills, or flight and holiday deals. When evaluating these packages, make sure that you work out how much each additional benefit is really worth to you - for example many stores will offer their own price match service, whereas services such as a free legal help line, or annual travel insurance, may be worth a great deal to you.

For frequent travelers, a card such as American Express offers fixed payments should you be denied boarding on a scheduled flight, or should your flight be delayed overnight. You only need to use a service like this once per year to justify paying the annual fee - but if you only fly two or three times per year, the chances of it being useful would be very slim, especially as the delay needs to be quite extensive to qualify for maximum benefits.