Choosing the right sort of credit card for you

Different credit cards are intended to suit different people. The best credit card for you will depend upon how you intend to use the credit card itself. Before you choose a card you should think about why you want it and how you intend to use it. What do you want to use your credit card for?

• Just to pay for purchases and not for credit at all — your intention is to pay off your balance in full each month
• To spread the cost of spending over a few of months
• To take advantage of special promotional offers (e.g. interest free balance transfers)
• Only for emergencies — to give you easy access to credit if and when you need it
• To show your support for a charity or other organisation

• The interest rates — for new purchases, balance transfers from credit cards you already have, cash advances and credit card cheques
• The length of the interest free period for purchases
• Incentives and benefits such as cashback, rewards or loyalty points
• Being able to manage your credit card account on-line
• Using your credit card when you are on holiday
• The availability of credit card cheques

Once you know what you want a credit card for, and which benefits are most attractive to you, you can start to look at the credit card products that are available to you on this site.

Asking yourself the following questions may also help. Be completely honest with yourself in assessing how you expect to use your card: Will I clear my bill in full every month?

Then the interest rate for new purchases is less important for you as you will not usually incur any interest at all. You should consider any applicable annual fee, the number of days or months ofthe interest free period and perhaps any rewards or cashback offers. Will I borrow occasionally?

Then the interest rate for purchases will be more important as you will be paying interest when you borrow. You should also consider the length of the interest free period and any applicable annual fee. You will now need to balance a number of features, so think carefully about your choice before committing to one card or another. Will I usually only pay part of the credit card bill?

Then the interest rate (APR) is very important as you will pay interest most of the time. You should consider both the standard rate as well as any introductory rate. In addition the way payments are applied to your account will be important to you and these will vary from one card to another. Will I use my card to get cash advances?

You should consider the interest rate and fees for cash advances. Typically, credit cards have a higher interest rate for cash advances than for new purchases, and are usually a more expensive way of obtaining cash than, say, from a current account. Do I want to buy a number of large value items that I can pay off over the next six months (e.g. when furnishing a house)?

Then consider whether there is an introductory interest rate. If you plan to use the card after the initial period and anticipate that you won’t be able to pay off the full balance each month then you should also pay attention to the standard interest rate. Do I want to reduce the interest payments on my existing card(s)?

Then consider transferring your balance to a new card with 0% interest rate for balance transfers (card issuers are increasingly now moving to charging a percentage for transferring balances). Check what interest rate is offered for balance transfers and any related fees. Again, if you plan to use the card after the initial period and anticipate that you won’t be able to pay off the full balance each month then you should also pay attention to the standard interest rate. If you no longer want or use your old card remember to cancel that card with your old credit card company and close the account. Do I travel abroad often and rely on my credit card to cover my expenses while I am away?

Then as well as the interest rate you should also be looking at the fees for transactions in foreign currencies, which can vary between cards.

Credit card users DO change their payment habits over time, and so you may find that you move from using your credit card in one way to using it in another way, or that the features that are most important to you have changed. This is something that you should consider when choosing your credit card so you might decide to select a card that offers you a good overall package of features. Alternatively you might prefer to apply for another credit card better suited to your changing needs at some time in the future.