Applying for a new credit card can be a daunting task. Not only is there the chance your application might be rejected – which in turn could have a negative impact on your credit rating (top tip: this is why it’s always a good idea to undertake a credit card eligibility check first!) – but trying to figure out which card is right for you is enough to make you want to lie down in a darkened room for a week or two.
There are TONS of credit cards on the market, each offering its own enticing list of possibilities. With so many options, it’s easy to have your head turned by an attractive stranger only to find, a month down the line, that they’re not right for you. And even if you know exactly what you want, it can still be challenging to zero in on your perfect partner if you don’t speak their language.
With an entire section of its website and app dedicated to all things credit cards, Compare the Market can help you cut through the jargon and sift through the options – allowing you to filter your search for “the one” by everything from “brand” to “type”.
Before you start your search, have a read of this simple, straight-speaking guide to learn about some of the most common types of credit cards on the market.
0% purchase cards are very interesting indeed …
Amazingly, not all credit cards charge interest. With a 0% purchase credit card you can buy items without accruing interest – so long as you pay the purchase off within the pre-agreed 0% period.
These cards are thought to be especially beneficial for big purchases and, if handled well, this kind of diligent money management can help improve your overall credit rating. Doing so means that if you want to borrow larger amounts in the future, a bank will be able to see that you’re someone who can be trusted.
Many card providers will offer 0% APR for a set period as a promotional tool to attract new users. How long this honeymoon period lasts depends on the particular provider, but it’s worth paying close attention to what the post-promotional rate of interest is before you apply.
Got pre-existing debts? Then a 0% balance transfer card could help
Low or non-existent interest rates can also be useful for managing pre-existing debts.
If you have an outstanding balance on a credit card with a high interest rate, the cost can quickly snowball. Where a 0% balance transfer card can help is by allowing you to move that outstanding balance to a new account that won’t make any additional charges for a set period of time (though you will often have to pay for the transfer itself). This can be a great way to save money and get a firm handle on your debts. Fortunately for customers, card providers like to outdo each other on the generous 0% periods they offer.
Play your cards right, and they can help you build your credit rating
As well as being tools to help you manage your money, credit cards also serve as records of your financial health. If you’re contemplating borrowing a large sum of money (for a mortgage, say), the bank will want to know you’re the kind of person who pays their debts. Credit-builder cards track the steady improvement of your credit rating as you keep up to date with monthly payments, and are one of several measures you can take to build an appealing credit rating.
Some cards even give back …
Some card providers go further than offering mere financial security; they actively spoil their customers. Similar to other loyalty programmes, cashback and reward credit cards offer benefits to loyal users in the form of monetary rebates (calculated as a percentage of their net spending figure), retail credit or air miles.
Frequent travellers, listen up
But air miles will only get you so far; once you touch down in a foreign country, you’re immediately liable for foreign transaction and withdrawal fees. Not so with travel credit cards, which are custom-built for regular travellers and don’t charge you extra to pay for things abroad.
The perks of money transfer cards
Money transfer credit cards are also purpose built – this time for users who want to send money straight to their current account for large, important purchases or debt settlements. Just as 0% balance transfer cards absorb debts from other accounts, money transfer cards can wipe out a looming overdraft with one click, allowing an interest-free grace period to arrange more manageable repayments. After this period is over, interest can return with a vengeance however, so use it wisely.
Looking for a new credit card? Then Compare the Market can help you compare the latest offers from a range of leading providers at comparethemarket.com/credit-cards. The company’s new Credit Card EligibilityCheck will allow you to check your eligibility for multiple cards from a selected panel of providers all at once. T&Cs apply
