Top tips on finding the best credit card

With more and more complex financial products coming onto the market, it can be difficult to choose the right credit card. They can become extremely expensive, especially if you end up choosing one that’s not right for you. We examine some top tips for choosing a credit card.

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Balance transfer Credit Cards

Balance transfer cards are good if you’re looking to combine several credit balances onto one single card. They might also be useful if you want to take advantage of lower interest rates. With the base rate remaining at an all time low of 0.5%, many top banks and lenders are offering 0% interest balance transfer cards. 

Recently, the balance transfer credit card market has become a lot more competitive with lenders offering longer 0% interest periods. The longest period to date is 22 months from Barclaycard Platinum with a balance transfer card with the fee of 2.9% on balance transfers.

Halifax has also launched its longest ever balance transfer credit card deal with 22 months at 0%, available to new credit card customers (a fee of 3.5% applies). There is however a limit of £3,000 with an APR of 18.9%.

Do bear in mind that if you want to transfer a large amount for a longer period than the initial deal, it’s might not be advisable to switch every time the 0% transfer period expires as this could potentially damage your credit rating in the long term.

Reward Credit Cards

These credit cards often offer incentives and rewards to encourage you to spend on the card. They rewards vary from card provider to card provider with many offering cash back schemes or points that you can use for air travel and gift cards. They do tend to have higher interest rates than other cards and some cards can have a limit on the rewards you can receive.

Sainsbury’s recently launched a new Nectar credit card, with 0% interest on balance transfers for 15 months as well as purchases for 6 months. If you shop frequently at Sainsbury’s, this might be the credit card for you. It features double Nectar points on all Sainsbury’s shopping for up to two years.

As an alternative, the Capital One Bank World MasterCard allows you to earn 5% cashback on purchases for 3 months with a limit of £100, and then reduces the rate to 1.25% for unlimited cashback.

Purchase Credit Cards

Purchase credit cards typically offer 0% for an introductory period before an interest fee is applied after. This type of card is perfect for someone who makes regular purchases on their card, be it large or small. They offer better interest rates on purchases for shopping in the high street or online.

The period on purchase credit cards can vary and the longest 0% period for purchase cards comes from Tesco. The Tesco Clubcard credit card offers 15 month at 0% on purchases as well as rewards to customers. Customers must earn over £5,000 to apply and the APR is 16.9%. Marks and Spencer also offer the same length of 0% interest for 15 months with reward points to shop there if you prefer it instead of Tesco. The M&S credit card also has a lower APR at 15.9%.

Adverse or Credit Building cards

If you have bad credit and are looking for a financial product that will boost your score whilst borrowing money, a credit building card could be the one for you. They also allow people with no credit history to improve and build their credit profile. They do however tend to have high APR rates as well as purchase interest.

For example, the Barclaycard Initial Credit Card has an 29.9 % APR (Representative Variable) 29.9 % purchases and balance transfers. Capital One’s Classic Visa Card is also a good place to start for those who want to rebuild their credit history. The APR (Representative Variable) is 34.9%   as is the balance transfers and purchases.

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Posted by: Nicola Severn Categories: Finance Tags: , , , 2 Comments

2 Responses to Top tips on finding the best credit card

  1. avatar Nectar says:

    Don’t forget the Nectar credit card also has an introductory bonus of 5,000 points – there’s an incentive there just for taking a card out.

    Richard.

  2. avatar Geralynn says:

    Action reqirues knowledge, and now I can act!