Compare Credit Cards

If you are in the market for a new credit card, this credit card comparison will help to explain the differences between each type of card. Knowing how to compare credit cards can help you choose the best card for your needs and circumstances.

Compare credit cards

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Coronavirus Update: Credit card providers may have temporarily stopped offering credit cards to customers due to the current Coronavirus (COVID-19) pandemic. This may result in a limited choice available to you.

Last updated October 2020

What are credit cards?

Put simply, a credit card allows you to purchase items on credit without the need for you to have the money now. It's essentially taking out a small loan that must be paid back, usually with some interest attached.

How you pay the credit card loan back will depend on what type of card you have, how much you’ve borrowed and a few other factors.

How do credit cards work?

Once you have made a purchase on a credit card, you will need to pay the balance off. There isn’t a set time to do this, but you may incur interest over longer periods. However, if you clear your outstanding balance in full every month, you won’t have to pay interest on your purchases.

If you can only make the minimum payments or miss payments each month, you will usually have to pay interest on top of the amount you have borrowed.

Remember: It’s best to pay off your credit card balance in full every month to avoid paying interest. If you need help managing your money, visit the Money Advice Service.

Different banks and lenders will set different terms for repaying your credit card. You can take out a card which has an interest-free period for the first year or one that allows you to transfer balances to save on interest. With so many different types of cards, we have covered the main ones below to help you compare credit cards.

Types of credit cards

Balance transfer

A balance transfer credit card is used to move debt from an existing credit card to another one. The benefit of this is that you can move existing debt that you’re being charged interest for onto a 0% interest card. This allows you to save money on the interest you would have been charged for a set period of time. This sometimes comes with a balance transfer fee attached, but it could still end up saving you money in the long run. If you are struggling with debt, this could be a great option.

0% purchase

With a 0% purchase credit card, this enables you to make a purchase and pay off the debt over a longer period of time without incurring any interest. This period of time is typically up to a year but maybe even longer.

If you have a big purchase you wish to make, it might be worth getting a 0% purchase card and making that purchase at the start of the deal, so you have plenty of time to pay it off before the interest-free period runs out.

Money transfer

If you want to transfer cash from a credit card to a current account, you may want a money transfer credit card. This allows you to pay off any expensive overdrafts or simply get fast access to cash.

Money transfer cards generally come with long 0% interest-free periods. However, you will be charged a fee on the amount you wish to transfer from your credit card to your current account. This fee will vary but is around 4% usually.

Credit builders

Credit building cards also can be known as ‘bad credit credit cards’ are ideal for those who have a low credit score and want to try and repair the damage. If you have no credit score at all, a credit builder card can also be useful to build your credit history from scratch.

Remember: Making regular purchases and paying off the balance in full will help you build a good credit history. This is great for those who wish to buy a home or a car on finance in the future as these purchases require good credit history.

Cashback and rewards

Cashback and reward cards allow you to earn cash back, points or other rewards on purchases. The rewards you can earn will vary depending on the bank or type of card. For example, you may get points to shop with at different restaurants or build up air miles for free flights.

Prepaid cards

A prepaid credit card has the benefit of the debt amount being secured with a prepayment. This means that the card spends like a credit card but acts more like a debit card. Prepaid cards can act as a great budgeting tool and are useful for separating money for certain things. For example, prepaid cards are useful for supermarket shopping, so you don’t go over budget.

Business credit cards

A business credit card is used solely for business purchases rather than personal use which allows you to keep your finances separate. They can be used to build future credit or to invest in new purchases for the business. Most major banks will offer business credit cards with various terms, and some may even offer rewards for business customers.

How to compare credit cards

There are a few factors to consider when comparing credit cards. The most important being:

  • Interest rates - This is the cost of borrowing through your credit card. The higher the interest, the more you’ll pay on the amount you borrow. The actual interest rate advertised may be different to the actual interest you receive as your credit score will have an impact on the rate.
  • Fees - This can include annual charges for using the credit card, late payment fees and other charges. We recommend that you read the small print very carefully.

Compare now to find the best credit card for you.

Credit card FAQs

Applying for a new credit card can be done in just a few minutes online. Most lenders have fairly simple online applications which only take a few minutes to see if you are approved.

Credit card applications generally want to know your full name, address history, contact information, income, job and other financial information. It’s a good idea to have all this ready before you apply to save time.

The Annual Percentage Rate (APR) tells you how much interest you will need to pay to use a credit card. If you have an interest-free period or pay in full each money, you won’t have to pay interest.

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