15 June 2016

Things to consider before choosing a new credit card

If you’re considering a new credit card, you might be feeling overwhelmed by the number of introductory offers around at the moment. We’ve reviewed some common credit card offers to help you decide which ones could save you the most money.


When you use a credit card which offers cashback to buy something, you receive a percentage of the amount you spent – so if your cashback is 0.5%, and you spent £1,000, you’d receive a £5 cashback reward. You might receive your cashback annually, or every month, depending on the terms and conditions of your credit card provider. There might be terms and conditions about when you can earn cashback – for example, some providers specify that you need to maintain a current account with them, or that only purchases made in the UK are eligible for cashback.

Is it right for you?

Cashback can be handy for those who frequently use their credit cards for everyday spending, and pay off the balance in full every month. If you use your credit card for lots of small purchases like coffees, lunches and grocery shopping, you’ll earn cashback on money you’d be spending anyway. If you don’t use your credit card often, you may not earn enough cashback to make this benefit worthwhile. Crucially, it’s only worth doing if you pay your bill in full every month – otherwise the benefits of cashback could be outweighed by the interest or fees.

Balance transfer offers

Interest–free balance transfer deals give you extra flexibility and time to pay back your debts without mounting up extra interest. The interest–free period usually starts from the day you open the account and can last 6 months, 12 months or longer. Usually to take advantage of an interest–free balance transfer offer, the balance transfer will need to be made within a certain time frame from account opening. Typically there’s also a balance transfer fee to pay when you move your debt onto a new card, although some providers offer fee–free balance transfer offers too.

Is it right for you?

This kind of offer could be a useful way to manage an existing debt that you can’t pay off straight away. It gives you a bit of breathing space. However, you still need to make at least the minimum payment each month to avoid a charge. This may not be the most useful offer for you, if you usually pay off your credit card balance every month.

Purchase offers

Interest–free purchase offers are great for spreading the cost of big purchases. For example, imagine you needed to book a holiday right away to get cheap flights or hotel rooms, but it would take you 3 months to save up for it. You could pay for the holiday using your credit card and then gradually pay off the balance over the next 3 months, without being charged any interest.

Is it right for you?

There might be a promotional interest–free purchase period when you open your credit card account – this could be 3 months, 6 months or longer. The main benefit is that you get extra flexibility around when you pay off your balance, and you can spread your costs by borrowing through the card, interest–free, for a longer period of time than normal. Remember, you still need to make at least the minimum payment each month to avoid a charge – check the terms and conditions carefully before you apply.

Rewards and discounts

Some providers give you a cash reward, often a small lump sum, when you open an account or make a certain amount of purchases within a set time. You might also get access to discounts and offers on things like restaurants, concert tickets or travel.

Is it right for you?

It depends what the offers are and whether you’re likely to take advantage of them. Take a look at what’s available and think about whether it will fit with your lifestyle and spending patterns. For example if there’s a cash reward for making a set number of purchases in a month, but you only plan to use the card for emergencies, there may be other offers that could suit you better. Likewise if your card has some great offers on international travel, but your ideal holiday is a camping trip to Cornwall, it’s not much use.

While introductory offers and schemes can be useful, it could mean that the overall cost of taking the credit card (e.g. the interest) is more. You should always consider the representative APR for a card and use it to compare different cards, as well as the other features and benefits that the cards have to offer.

Read guidance on choosing a credit card from Citizens Advice.

Thinking about applying for a new credit card?

Credit cards are available to those aged 18 or over (UK residents only), and are subject to circumstances.

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