Around half of the population within the UK carries at least one credit card, according to the regulator the Financial Conduct Authority (FCA). So if you happen to have just one card in your pocket, you'll need to ensure that it's actually the right card for you. MoneySuperMarket have identified five types of credit card users, which one are you and what plastic may help you out?
If you have an existing credit card balance that is accumulating interest, it stands to reason that it will take longer to clear. Under these circumstances, a 0% balance transfer credit card, which won't charge you interest on your balance that you shift from your original provider, can give you enough space to keep in under control and pay it down.
1. You have credit card debt already
People with particularly big balances, who need a large amount of time to pay of their debt, could benefit from the Halifax Balance Transfer Card. This card offers 0% on balance transfers for 41 months which is the longest 0% card on the market. There is a catch though, you'll have to pay a one off fee of 3.5% (£35 on a balance of £1,000) but if you transfer within 90 days of applying for the card, Halifax will refund you 0.32% so the overall fee is 3.18% (£31.80 on a balance of £1,000). If you're unable to pay of the remaining balance on the card, the interest rate will jump up to 18.95%.
It's vital to clear the balance or transfer again after 41 months though. If you don't, you'll be charged interest at a representative annual percentage rate (APR) of 18.9% (variable), which could put you back to square one again – especially if you have also spent on the card as only the first six months is interest-free on purchases.
If you don't need that long, you may as well take a deal with a cheaper transfer fee. At 0.59% (so that's just (£5.90 on £1,000), the Virgin Balance Transfer Card has the one of the lowest fees on the market. You'll still get a big 30 months at 0% to pay down your debt. If you don't clear it by then, you'll be charged interest at a representative APR of 19.9% (variable).
A 0% purchase card makes paying for big buys more manageable, as you can spread the cost over time, without the balance incurring any interest.
2. You want to make a big purchase
The Sainsbury's Purchase Credit Card, for example, gives you 0% on purchases for 28 months, plus Nectar points on your spending. You'll earn 2 Nectar points for every £1 spent at Sainsbury's shopping and fuel and 1 point for every £1 everywhere else. If you don't clear the balance after 28 months, you'll be charged interest at a representative 18.9% APR (variable).
If you never let a balance from one month linger over to the next, you could actually get something in return for your discipline.
3. You pay off your balance in full, every month
For example, the American Express Platinum Cashback Everyday Credit Card currently offers 5% cashback on spending up to £2,000 for the first three months. After that you'll earn an ongoing rate of 0.5%. Keep in mind that you must spend at least £3,000 in the year to qualify for any cashback. There's no fee on this deal but it comes with a representative APR of 22.9% which will outweigh any cashback benefits if you don't clear your balance.
There's other options too which you can view at MoneySuperMarket's dedicated channel.
Globe-trotting credit card users can get stung by loading fees and cash withdrawal fees, which can add 3% or more onto the cost of any overseas transaction. If you travel a lot, it makes sense to get a card designed for the task. The Halifax Online Clarity Credit Card, for example, is free to use anywhere in the world, even when withdrawing cash from ATMs. It also has a representative APR of 18.9% (variable).
4. You travel a lot
You'll struggle to be accepted for any of the cards previously mentioned if your credit score isn't great – but that doesn't mean you're locked out of the credit card market.
5. Your credit history is poor
There are cards like the Aqua Classic credit card, designed specifically to help you build or rebuild your credit score, provided you use them sensibly and pay off your balance ion full and on time, each month.
The Aqua card has expensive representative APR of 27.4% (variable), but also offers free, unlimited access to your credit report, worth up to £80 a year.
Please Note: Rates and figures were correct at time of writing