A Guide to Choosing and Applying for a Credit Card
This guide helps you understand what to consider when selecting a credit card, how the application process works, and what steps to take if your application is declined.
Picking the Right Credit Card
With so many credit card options on the market, it’s important to find one that fits your personal needs.
First, think about how you plan to use your card. Will it be for online shopping, travel expenses, paying household bills, or spreading out payments for a large purchase? The way you intend to use the card affects which features are most important to you.
If you’re confident that you can repay the full balance each month, you could benefit from interest-free periods. In such cases, the interest rate might not be your main concern, and you might instead look for perks like cashback or rewards. However, it’s wise to have a backup plan in case you’re unable to pay off the full amount.
If you’re planning to carry a balance from month to month, then interest becomes a key factor. Opt for a card with a lower interest rate, and make sure you can manage at least the minimum payments.
Helpful Tip: For more advice on credit options, check out resources on finding the best credit deal.
Already Applied for Credit Cards?
Repeated applications for credit cards can impact your credit score. Every time you apply, a record is made on your credit file. Multiple applications or refusals might make you appear risky to potential lenders.
To learn more about how your credit score works and how it affects borrowing decisions, look into resources on credit ratings.
Struggling with credit card debt? There are services available to help you manage your repayments and reduce what you owe.
Credit Card Features to Compare
Use this checklist to evaluate credit card offers:
- APR (Annual Percentage Rate): Shows the cost of borrowing if you don’t pay your full balance each month. Use this to compare different cards’ long-term costs.
- Minimum Repayment: Typically 3% of your balance or £5 (whichever is greater). Make sure this is manageable for your budget.
- Annual Fees: Some cards charge an annual fee. If unpaid in full, you’ll also pay interest on this amount.
- Other Charges: Check for fees related to late payments, exceeding your credit limit, or overseas transactions.
- Introductory Rates: Look for cards that offer low or 0% interest initially. Pay attention to when the promotional period ends and what the standard rate will be.
- Rewards and Loyalty Schemes: Earn points for spending, which can be redeemed for goods—often from specific retailers. Review how useful these rewards will be to you.
- Cashback Offers: You might earn money back on purchases. Make sure you meet the conditions, like paying the full balance monthly, to qualify.
Comparing Different Cards
Credit card providers must give you a summary of essential details, like interest-free periods, interest rates, and other fees. This helps you make direct comparisons.
Use of Comparison Sites
Comparison websites can help you find credit cards suited to your needs. Just be aware that not all providers are listed on every site, so check a few different sources.
How to Apply for a Credit Card
You can submit a credit card application online, over the phone, by post, or in person at a bank.
The provider will review your credit file through a credit reference agency to assess your financial history and determine whether you’re likely to repay the borrowed money. This record includes current accounts, debts, and any legal judgments over the past six years.
You can request a copy of your credit report from a credit reference agency for a small fee to see what information lenders will view.
Important: When completing the application, ensure all details are accurate. Providing false information could be considered fraudulent. If you’re unsure how to fill out the form, ask the provider for guidance.
What Happens if You’re Approved
If the card issuer accepts your application, you’ll be asked to sign a credit agreement. This legal document outlines the borrowing limit, interest rates, repayment terms, applicable charges, and both your rights and responsibilities.
Always read the full terms and conditions—even the small print—before signing, so you know exactly what you’re agreeing to.
Adding Extra Cardholders
You may be able to authorize someone else to use your credit card, such as a partner or family member. Keep in mind that you remain responsible for all charges made on the card. Set clear spending rules and keep track of their usage to avoid exceeding your limit.
If Your Application Is Denied
Credit card companies are not required to approve every application. If you’re rejected, it may be due to a poor credit score or a high perceived risk.
You can ask which credit reference agency the lender used to check your file, then review your own report for accuracy.
Note: Lenders are not allowed to discriminate based on race, gender, disability, religion, sexual orientation, or location. If you suspect unfair treatment, speak to an adviser for help.
Where to Get Help
For more support managing credit card use, visit reputable financial advice websites such as the Money Advice Service. They offer tools, tips, and comparison services to help you borrow responsibly and make informed decisions.