A simple guide to credit cards

A credit card lets you spend up to an agreed amount, called your credit limit. The exact amount will depend on things like your credit history and income. 

Each month you’ll get a statement with the:

• total amount you owe, known as your balance

• minimum amount you must pay, and 

• date you need to pay it by.

If you choose to repay the full amount, you won’t pay interest on anything you’ve spent. But you’ll still pay interest on cash withdrawals.

If you pay less than the full amount, you’ll pay interest on everything you owe. This will be added to your next statement. Interest rates are typically between 25% and 60%, so this can be expensive.

If you pay late or less than the minimum, a negative mark is added to your credit file. 

This can mean you’re less likely to be accepted if you apply for other products, as other companies can see you’ve missed a payment. Or you might not qualify for the cheapest deals.  

You’ll also usually need to pay a late fee and might lose any special deals, like a low interest rate. 

To avoid this, you can ask your credit card provider to set up a Direct Debit. This means they can take the payment from your bank account automatically on an agreed date every month. This can usually be for the minimum amount, the full amount or an amount of your choice.  

If you struggle to manage your money or think you might overspend, try and avoid getting a credit card. It could quickly lead to a spiral of uncontrollable costs. 

See Managing credit well and Help if you’re struggling with debt for more help.

There are special types of credit card you can get, each designed for different purposes. 

Here’s a simple overview.

While you can avoid most interest by repaying a standard credit card in full every month, there are special cards that charge no interest for longer periods.

With both cards, make sure you repay at least the monthly minimum repayment. If you don’t, you could damage your credit file and the 0% deal could end. 

You’ll also pay expensive interest if you use them to take out cash or if you still owe anything when the 0% periods end.

Taking out new borrowing is usually best avoided if you’re in debt. But there are types of credit card that can help reduce your costs. 

If you’re struggling to repay your debts, always speak to a free debt adviser to learn about all your options – there might be something more suitable than the cards below. 

You’ll need to repay at least the monthly minimum repayment or you could lose the deal. When the 0% periods on these cards end, you’ll pay expensive interest on anything you still owe.

See Help if you’re struggling with debt for other ways to tackle your debts, including free debt advice. 

You normally need to have a good credit history to get a standard credit card. But there are special cards that often accept you if you’re new to credit or have past problems.

There are special credit cards that give you freebies for spending on them. But this is usually only worth it if you’ll always repay everything you owe each month. You might also have to pay an annual fee to keep the card.  

Standard credit cards are usually expensive to use abroad, with fees and poor exchange rates. But there are cards that are designed for use in different currencies. 

Here's how to compare and find a credit card, and the best way to apply. 

A credit card is just one way to borrow money. Use our Your options for borrowing money  tool to see if a different type of credit could suit your needs better.

When you apply for a credit card, lenders check your credit history. For example, to see how well you’ve paid back any other borrowing.

This information is usually used as part of the decision to accept you, so it’s important it’s correct and free from typos and mistakes.  

You have three credit reports to check, one with each of the three credit reference agencies. If anything is wrong, report it to the credit reference agency straight away. 

Find out more about this in our guide How to check your credit report for free.

You need to be at least 18 to apply for a credit card, but each provider will have other criteria too. For example, earning a certain salary and having a good credit history.

To help, eligibility calculators will show you which credit cards you qualify for. You’ll also see how likely you are to be accepted for each one, without marking your credit file. 

You can find eligibility calculators on many lenders’ websites and comparison sites, such as:   

• MoneySavingExpertOpens in a new window   

• Credit KarmaOpens in a new window  

• ClearScore Opens in a new window   

No site scans all lenders and some might have exclusive deals, so it’s best to combine a few. 

If you’ve found a credit card you’d like to apply for, make sure you understand all of the features. If you’re not sure, ask the provider before applying.

You can usually apply online, in a branch or by post. Be careful when filling in your details as mistakes could mean your application is refused.

If you’re accepted, you should expect to receive the card within a week or so. 

Before spending on the card, make sure you plan how you’ll repay it. It’s much cheaper if you can repay everything each month. 

Our free and easy-to-use Budget planner can help you record all your spending. 

You can usually keep track of your credit card balance using online or mobile banking. This can help make sure you don’t spend more than your credit limit.

It’s also worth setting up a Direct Debit so you won’t accidentally miss a payment. Just make a note of your statement date and double check you have enough money in your bank account.  

If your application is rejected, don’t rush to apply again. Applying too many times in a short period can damage your credit score. 

Instead, ask why you were declined. You might be able to fix the problem or appeal the decision.

To get an action plan with more steps you can take, use our What to do when you’ve been refused credit tool. It takes two minutes to complete.