Credit Card Types

Credit Card Types

Which type of card is best?

It can feel a bit like wading through treacle when it comes to choosing a credit card but it’s worth considering how you’ll use it as this can determine the best card for you.

Cashback and reward cards

If you repay your bill in full every month the rate of interest is irrelevant so these are a good option. They tend to charge higher interest rates but pay you for using them, some literally in cash, others with in-store vouchers and some with loyalty points that can be spent in-store or converted to things like cinema tickets. You need to spend quite a bit to benefit but if for example you use it to do your weekly shop and pay for your petrol each month the rewards quickly tot up.

0% Purchases

These are ideal if you want to spread the cost of an expensive purchase, for example a family holiday. The length of the 0% deal varies from card to card but is generally 3-12 months, occasionally 18 months. You need to be disciplined and repay the loan in that 0% offer period, as the interest rate will shoot up at the end of it.

0% balance transfers

If you have existing credit card debt, these cards enable you to transfer it and not pay any interest for a set time, so they are a useful way of minimizing your borrowing costs. The offers usually run for 6-12 months, occasionally longer, but you must cover the minimum payment each month or the 0% deal could be withdrawn and you may be liable to other fees. Any additional spending will be subject to the card’s standard APR, which will also apply to the original debt if it’s not cleared at the end of the offer period.

Low-rate life of balance

These cards allow you to transfer debt from another credit card and guarantee the interest rate on that debt won’t increase provided you pay the minimum each month. If you don’t like switching regularly and know you’ll take longer than 12-18 months to clear your debt these are worth looking at. But remember not to keep spending on it. It’s only the original debt that’s guaranteed at the low rate.

Cards to use abroad

Most providers charge extra (and often high) fees to use your card abroad, but a few don’t. So if you’re a globe-trotter these cards can make sense. They generally charge a higher interest rate so you’d need to be able to clear the debt each month for sums to really add up.

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