Not sure which credit card is for you? Read our guide to decide for yourself.
In 2020, there was £16.6 billion worth of repayments which included credit cards; they seem daunting at first glance, so we're here to break it all down for you in this blog post. We'll get into how credit cards work, how to choose the right one for you and other important things to know.
Credit cards are essentially debit cards but spending money from your card provider instead of your own. You'll get a bill at the end of each month detailing how much you've spent and how much you need to pay back.
If you pay back in full, you won't be charged any interest, but if not, you need to take note of the interest rate to avoid getting into the "debt spiral".
Most credit cards will advertise various rewards and benefits to attract customers, such as air miles, cashback and more.
Credit cards come with advantages and drawbacks that are important to consider before getting one yourself.
Here's a quick summary of the benefits and disadvantages (see a full explanation in our Debit Cards vs Credit Cards blog post):
If you're confident at managing your money and can pay off the repayments then yes! A credit card would be great to add to your wallet so you can take advantage of what a credit card offers.
However, if you're not confident with your finances and struggle with overspending right now, focus on getting the hang of that before getting a credit card.
The many credit cards make it challenging to narrow down which to get and applying for many can damage your credit score so here are a few things to consider before getting one:
As the name suggests, these credit cards are especially for students who might not have enough income or a credit score yet. These come with lower spending limits and higher interest rates. You must be at least 18, studying at a UK university and a UK resident.
If you travel a lot, a travel credit card might be the one for you as they don't charge exchange fees. However, most of the time, you don't get the rate on the day you purchase, rather, the day when the transaction is processed.
These cards are designed for spending and allow you to spread payments over time with no interest. Most of the time you'll have an agreed 0% interest period that can depend on the provider and your credit score.
Cashback is a popular reward if you want to get the most out of your card. Some have extremely high fees for late payments which cancel out the cashback, so make sure to do your research and compare different deals.
This is particularly attractive as flights and holidays can get expensive if you travel often. Check which "networks" and airlines are on offer as you'll likely get stuck with them.
If your credit score is low, a credit builder card is a way to boost your credit score. The credit limit is low so that you can start to prove that you can complete repayments.
Use this eligibility checker from MoneySuperMarket to see what cards might be right for you and which you might be pre-approved for.
Here are some other important things to know about credit cards:
1) Connect to the free Roqqett app to keep on top of spending before the bill comes in.
2) Set up text alerts for overspending / spending limits
3) Set up a direct debit to always pay off the minimum amount
Discover and read some our latest blog articles.
The key spending categories that will help you stay on top of your finances.Read
How Roqqett makes staying on top of your finances hassle-free, satisfying and dare we say... fun?!Read