Top tips for choosing a credit card

Finding a great credit card deal
Credit cards – there are hundreds of them out there, but how do you choose the right one?

Our top tips tell you what to look out for and make choosing the right credit card simple.

1. Think about how you use your credit card.
Taking a bit of time to work out what you want from your credit card will make it easier to pick a great deal, and could even save you money. For example:

If you don’t plan to pay back your balance in full each month, look for a credit card with a low APR so you can save on interest payments.
If you like to shop, look for a credit card with an introductory period where you pay 0% on purchases.
If you already owe money on a credit card, look for a credit card which charges 0% interest on balance transfers.
If you use your credit card a lot, but pay off the balance every month, then a cashback or reward credit card might be your best deal.
2. Be aware of balance transfer fees.
Taking advantage of 0% balance transfer deals could save you a fortune in interest payments and help you to repay your debt more quickly.

Be aware that most credit card companies charge you a balance transfer fee – usually around 3% of the amount you want to transfer – which will be added on to your balance.

3. Check the order of payments.
Credit card companies often specify the order in which you can pay off what you owe them, because the interest you pay on a balance transfer, purchases or a cash withdrawal will often be charged at different rates.

Many credit card companies use your monthly repayments to pay off your cheapest debt first - leaving the more expensive debt to build up more interest.

Check your credit card to see what order you will be able to pay off debt – it could save you money.

4. Find out about minimum repayments.
All credit cards have a minimum repayment that you must make each month.

Minimum repayments vary, but 2 to 5% of your balance is standard.

A credit card with low monthly minimum repayments might seem the best, but this means that you may end up paying off what you owe more slowly – and building up more interest on what you have borrowed.

5. Think about Payment Protection Insurance (PPI).
PPI is an optional insurance policy which you can take out to cover your credit card repayments if you are unable to work because of illness or redundancy.

PPI generally only covers your minimum monthly repayments. Be sure to read the terms and conditions to make sure PPI is right for you.