No credit card is perfect for every borrower. Whether it's for a new purchase, a balance transfer or repairing bad credit, cards are designed to be best at carrying out one specific task.
Any borrower who uses the wrong type of card will likely end up paying a fortune in interest and fees.
Here, we take a look at the various types of card so you can decide which one will work best for your needs.
Best credit card for upcoming borrowing
As the name implies, 0% new purchase credit cards allow you to put any upcoming expenditure on an (initially) interest-free card. After a set amount of time, the rate will rise to a more traditional APR (usually in the region of 16-20%), so it's important you do your utmost to clear your debt in full before then.
The longest offer on the market at present is 19 months, but it's important to remember that the best offers are only available to those with an excellent credit score.
If your score is less than perfect, the good news is that you could still qualify for a 0% deal, but the duration will be far shorter. For example, there are credit builder cards out there with an interest-free window of just 4-6 months.
Best credit cards for clearing existing debt
If you already have costly credit card debt that will take some time to clear, then the first thing you need to do is switch it to a 0% balance transfer credit card.
These tend to have a longer interest-free window than new purchase cards, but they also come with an up-front fee which is then added to your debt.
The top balance transfer deals run for up to 33 months, but again these are only for people with an excellent credit rating, with shorter deals available to those with a less exemplary credit rating.
A final point on balance transfer credit cards: the longest deal isn't always the cheapest. This is because the longer deals have larger fees than cards with a shorter 0% offer. So if you think you could pay your debt off, say, in one year rather than three, you should take the time to research low fee balance transfer cards.
Best credit cards for bad credit
Whether it's because you have never borrowed before, or have perhaps been in financial trouble in the past, you could find yourself with a low credit rating that needs improving.
Because they are given to borrowers who are regarded by banks as 'higher risk', these cards often come with sky-high interest rates of up to 40%. That means you need to be extremely careful with such cards and clear your debt in full each month.
Only use them to make purchases you need to (such as groceries, transport etc) and then pay it off immediately. Repeat each month and you should soon see your credit report improving and your options for borrowing could improve.
Before you apply for a credit card
Regardless of which card you go for, remember the golden rule: never use it to withdraw cash. You'll be charged a fee and will start racking up interest at an elevated rate – even if it's on a 0% credit card!
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