Best credit cards

The complete guide to credit cards

From getting paid to shop to clearing debt while paying no interest, we help you find the best credit card for your financial needs.

Get the best credit card for you

Credit cards can be a fantastic tool for shoppers, and come in all sorts of different forms to suit your needs.

Whether you need a card that allows you to pay off your debt in stages without charging interest, offers you a reward on your spending, or simply allows you to build a credit score, there will be a credit card for you. 

Here we run through the main types of card, who they are designed for, and how to get the most out of them.

Use an eligibility tracker & maintain that credit rating

Before we get into the cards themselves, it’s worth noting that the market-leading credit cards are generally only available to borrowers with spotless credit ratings (although there are some decent offers for poorer credit scores, as we'll cover later).

If you apply for a credit card only to find yourself rejected, your score will take a further knock and your chance of being accepted for others will be massively reduced.

For this reason, we strongly recommend you use an eligibility checker to help you understand your chance of successfully applying without leaving a mark on your credit report.

If you find you're unlikely to qualify for the cards that you really want and are able to wait, we've put together this guide on how to improve your credit rating over time.

Best 0% purchase cards

Let’s say that you have a large spend coming up, for example on a new kitchen or a big family holiday. 

Given the size of that spend, you may not be able to clear the balance in one go. Yet paying it off in stages will ultimately cost you even more since you’ll be charged interest on your outstanding balance.

That’s where a 0% purchase card comes in. As the name suggests, it’s a card that doesn’t charge interest on new spending for a set period, in some cases in excess of a year.

As a result, you can pay the debt off in manageable chunks each month, without being punished with interest charges.

With any 0% purchase card, it’s really important that you make a careful note of when the interest-free period will be coming to an end, and work out how much you need to pay each month in order to clear the debt in full before you start being charged interest again.

Best 0% balance transfer credit cards

An alternative option if you have a big spend coming up is an interest-free balance transfer credit card.

The idea here is that you purchase those expensive items on your existing credit card, and then transfer the debt over to your balance transfer credit card.

This is also a good option for anyone who already has a large outstanding balance on their current card and want to spread the payments.

A 0% balance transfer card doesn’t charge interest on balances moved onto the card for a set period, meaning you can pay off the balance in more budget-friendly monthly payments.

A key difference with 0% balance transfer cards is that you will generally have to pay a transfer fee when moving the balance over.

This will be a percentage of the balance being moved ‒ so for example, if your card has a 1% fee and you transfer over £4,000, then you will have a fee of £40 added to your balance.

Check out our round-up of the longest 0% balance transfer credit cards and low-fee 0% balance transfer credit cards

Importantly, some cards do not charge a transfer fee at all. These tend to have shorter 0% periods, but may save you money if you only have a relatively small balance to pay off.

We’ve highlighted the best fee-free balance transfer credit cards for you in this piece. 

As with 0% purchase cards, it’s really important that you note when the interest-free period will be ending and how much you need to pay each month in order to clear the balance before you start being charged interest again.

Best all-round 0% transfer & purchase credit cards

If you find yourself in the difficult position of needing to clear both existing credit card debt and having to cover a big upcoming purchase, or you simply want the flexibility of a card that has both 0% transfer and purchase offers, then you could go the all-round credit card route.

A few years ago, these dual-purpose deals were considered a bit pointless as the 0% windows were so short they were a jack-of-all-trades that did nothing particularly well. 

Now, however, they rival some of the top specialised balance transfer cards and purchase cards and are undoubtedly an attractive option for some borrowers.  

A word of warning

It's easy to see why someone would want a card that offers greater flexibility, but if you do find yourself having sizeable existing debt and upcoming purchases you can't cover at the same time, it's vital you only use one of these cards to buy you vital time while you get yourself back on the path to financial health.

They obviously won't solve your debt problems by themselves: you need a plan.

Read our guide to getting out of the red for practical tips and also this piece on where to find free debt support if you need further help.

Best money transfer credit cards

A money transfer credit card is a type of 0% balance transfer credit card.

The important difference is that rather than moving a balance over from a separate credit card, you instead transfer money from the money transfer card into your current account. The card then charges 0% interest on your balance for a set period.

This sort of card is a good option if you have an expensive overdraft that you need to clear, as it gets you back into the black and you can then pay off the balance on the card in manageable stages.

As with a conventional 0% balance transfer card, you will generally have to pay a transfer fee with a money transfer credit card. Again, this is calculated as a percentage of the sum being transferred, and is generally around 4%.

It’s an excellent idea to make a note of precisely when your interest-free period concludes, and to calculate what you need to pay each month in order to clear that balance before you start being charged interest.

Best reward credit cards

A reward credit card is rather different, as it offers you some form of reward for spending on your card.

For example, you might be rewarded with loyalty points for a particular scheme, such as Clubcard or Nectar points.

You can then cash these in for rewards from that particular scheme, whether that’s money off your weekly grocery shopping or exchanging them for vouchers with partner retailers.

Alternatively, you might earn a form of air miles as you spend, which you can use to reduce ‒ or even cover entirely ‒ the cost of flights for your next holiday.

Many big airlines have their own reward credit cards, so you can build up their version of air miles and cash them in the next time you need to book a flight.

The rewards are earned based on how much you spend, but the generosity of different schemes will inevitably vary.

For example, one loyalty scheme may provide you with one point for every £1 spent, while another may reward you with one point for every £5 spent.

Importantly, these cards are only suitable for people who pay their balance off in full each month. Otherwise, the cost of interest charged on any outstanding balance will erode the value of any rewards you accrue over the month.

To get the best return from your reward credit card, it’s a good idea to put as much of your monthly spend as possible on your credit card. This heightens the rewards you build up, irrespective of whether that’s loyalty points, air miles or some other form of reward. 

This doesn’t mean you should spend more than usual though. There’s no point getting yourself into difficulties paying off your monthly credit card bill as a result of chasing slightly higher rewards.

It’s not a good idea to have a range of different reward cards in your wallet. You’ll ultimately be better off by picking your preferred reward scheme and focusing all of your spending on the affiliated credit card.

Best cashback credit cards

Cashback credit cards work in much the same way as reward credit cards.

The crucial difference is that rather than rewarding your spending with points for a specified loyalty scheme, you instead receive cash.

This is calculated as a percentage of the money you spend in each transaction.

For example, the card may pay a rate of 1.5% cashback each time you spend ‒ so if you pay £100 for concert tickets, you’ll pocket £1.50 in cashback.

Some cards offer a higher rate of cashback during the first few months of card ownership. As a result, it may make sense to take these cards out shortly before you have some significant spending ahead, such as just before Christmas or ahead of booking a big holiday.

It’s important to note that unlike other reward credit cards, some cashback cards come with an annual fee.

You will need to take this into account when working out what sort of money you can make from the card over a year ‒ it may be that you end up better off with a card that offers a smaller rate of cashback but which doesn’t charge a fee. 

As with conventional reward credit cards, cashback credit cards are only really worth considering if you can clear the outstanding balance each month. Otherwise, the interest charged on your debt will eat into the cashback you build up.

And again, while it’s a good idea to put as much of your usual spending on the card as possible in order to earn as much cashback as possible, you should resist the urge to spend more than you usually would just because you want to pocket more cashback as this can lead to financial issues.

Best travel credit cards

Credit cards aren’t just a useful option when it comes to cutting the cost of heading off on your travels ‒ they can be an excellent choice for your spending money too.

Not everybody feels comfortable changing up all of their money for a holiday in advance and then having to find somewhere safe to keep it.

However, using your normal debit card to take money out from an ATM or your credit card to pay when shopping or eating out can prove incredibly expensive as a result of the additional charges and interest levied for using your cards abroad.

That’s where a travel credit card can come in. These cards are specifically designed for people to use when overseas, and so don’t hit you with punishing fees when you purchase with them on your holidays.

These cards also tend to be more generous if you use them to withdraw from an ATM too, though it’s important to check the exact terms and conditions of your card as this can vary.

Best credit builder credit cards

Getting a credit card is not always straightforward, particularly if you have a poor credit history or even have no credit history at all.

After all, if you have a decent credit history lenders will feel more comfortable offering you credit than if you have never borrowed before.

That’s where a credit builder credit card can prove useful.

These cards are aimed at borrowers with patchy credit records ‒ perhaps they have missed payments in the past or have a county court judgement (CCJ) ‒ or those who have never taken out a credit product before.

Because of the types of borrowers these cards are designed for, credit builder cards often have very small credit limits. In some cases, you can increase this over time as you keep up with your repayments. 

These cards do not tend to come with many frills. You are unlikely to get an interest-free period on spending or cashback for example.

Instead, they are an opportunity for you to demonstrate that you can manage credit responsibly, by making at least the minimum repayment each month.

With credit builder credit cards, the interest rate tends to be much higher than that charged on mainstream credit cards.

As a result, it may make sense to just put a small, manageable portion of your spending on the card each month so that you are easily able to pay off the balance in full.

Get more protection with a credit card

No matter which credit card you choose, we should mention a great perk offered by all credit cards: when you spending on plastic you get added protection compared to using cash or a debit card.

This is down to Section 75 of the Consumer Credit Act, which means that if things go wrong with the purchase the credit card provider is “jointly and severally liable” to put things right.

So let’s say that you purchase flights from an airline that then goes bust. While you won’t be able to get your money back from the airline, you will be able to claim your funds back from the card provider.

There are certain criteria your spend will need to meet in order to qualify for this protection though.

The item or service you buy needs to cost between £100 and £30,000, and you need to have paid for at least a portion using your credit card. So using that airline example, if the tickets cost £500, so long as you put £1 of that spend on your credit card, the protection applies.

For more on Section 75, read our guide on your rights when shopping.

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