What to Look for in a Credit Card

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By Sarah Watts
Updated on Monday 21 June 2021

A person using their credit card online to pay

Choosing a credit card that fits the bill can pay dividends in the future.

With this in mind, below we outline everything you should consider before choosing or applying for a credit card and what you should do if your application is refused.

How to choose a credit card

To pick the right credit card for you, you first need to consider what your credit card purpose is. What uses do you want your credit card for?

For example, do you want to use a credit card for:

If you simply want a credit card to be able to pay for shopping before your monthly paycheck comes in and intend to clear the balance in full every month, then you could consider applying for a rewards credit card with cashback, loyalty points or rewards on purchases. That way, you can build up a nice little nest egg of goodies for simply using your credit card.

Or, if you want to pay for an expensive holiday, perhaps look for a 0% interest credit card with a long interest-free term so you have ample opportunity to clear the balance before the interest-free period expires. 0% balance transfer cards are also ideal to use for expensive, one-off purchases or to pay off large debts (i.e. a balance transfer).

Whatever the reason you want a credit card for, there are many things you should take into account when you compare credit cards and what they have to offer. Remember, ‘all that glitters is not gold’ and if some cards seem too good to be true, they usually are.

Check out our table below for a summary of what to look out for and what to avoid when choosing a credit card.

Credit card feature

What to look for

What to avoid

Interest rates (APR)

Interest is charged on the amount you borrow unless you clear the full balance every month. This interest rate is typically referred to as an annual percentage rate (APR). The average APR is approximately 25.3%.

Avoid any cards with a high APR (25% or more) as should you fall into financial difficulty, you will struggle to clear the credit card debt once a high-interest rate starts to be applied.

Annual fee

Some premium credit cards that offer rewards or services very often charge an annual fee. This annual fee is charged to your credit card account and if you do not pay it off in full, interest will be charged on it.

Always check whether an annual fee is payable and how much it is, so you can way up the cost of this against any other benefits the card may offer. Shop around for cards with no or low annual fees.


In addition to an annual fee, you should check your credit agreement for any other types of charges and fees. For example, you can be charged a late payment fee or be charged for exceeding your credit limit.

If you’re financially solvent, you may think you don’t ever need to worry about charges for late payments or for exceeding your credit limit. However, you never know what the future may hold and you could lose your income. For this reason, avoid cards that have hefty penalty charges.

Minimum repayment

When you borrow money on a credit card, your provider will expect you to pay back a ‘minimum repayment’ every month. This is the smallest amount of money you can pay towards clearing your debt. This can be 1-3% of your outstanding balance or a fixed sum of £5, £10 or £15, etc - the minimum amount payable depends on your outstanding balance and will be whichever amount is the highest.

You should avoid just paying the minimum repayment on a credit card unless absolutely necessary and certainly make sure you never, ever miss a payment. The interest applied to your balance can soon make your debt spiral out of control. It’s always best to pay off your balance in full, every month, otherwise it could take you decades to clear your debt.

Introductory offer

Introductory offers can include a low-interest rate or no interest rate at all (0%) for a certain period of time. This means you can usually use your credit card for a certain number of months, without any interest (or a low amount of interest) being applied.

Switching credit cards from a high interest card to a 0% interest card can allow some borrowers to significantly reduce their debt or pay it off completely.

Whilst cards with introductory offers are initially great, you should only ever consider this type of card a short-term loan solution and ensure you’re able to pay monthly balance off in full prior to the intro offer period expiring. Once the introductory offer period expires, you’ll be stung with a high-interest rate on any balance owed.

If you’re taking out a balance transfer card, check what fee is payable for the transfer - this is typically around 1-3%. You should also seek a card with the longest 0% interest period to give you ample time to clear the debt before the interest free period ends.

Cashback offers

Some card providers will entice you with a cashback offer. This means you will get money credited to your account as a reward for spending.

Check the terms and conditions of the cashback offer as very often you have to pay off your credit card balance in full every month to receive any cash back reward.

Loyalty points & rewards

Reward credit cards allow you to earn loyalty points or air miles when you spend money using your card (or cashback - see row above).

You can sometimes earn a larger amount of loyalty points by using your card to pay for certain products or services from certain vendors or businesses (your credit card provider’s ‘partners’).

If you travel regularly, having an air miles card can be highly beneficial to your pocket.

Watch out for high-interest rates on reward credit cards. They’re usually so high that if you fail to clear your monthly balance and interest is applied to your account, the amount of interest will usually far exceed any of the so-called ‘rewards’.

You should only apply for this type of credit card if you are certain you’ll be able to clear your full balance every month by setting up a monthly direct debit.

Applying for a credit card

If you’ve applied for credit cards before and had a refused application, you should check the date you applied and avoid applying for another card within three months of that application.

This is because when you apply for a credit card, the card provider will run a check on your credit file when assessing your application and any hard checks will be noted on your credit file. So applying for too many credit cards in quick succession negatively impacts your credit rating and is a ‘red flag’ to potential lenders as they will see this as you being desperate to borrow money.

Having a low credit score means you will usually only be offered cards with higher rates of interest. You should therefore check your credit score with the three main credit reference agencies in the UK before applying. You can obtain a multi-agency report, for free (30-day free trial), from checkmyfile.com.

The quickest and easiest way to find and apply for the best credit card deals is by comparing UK quotes online, taking into account all the criteria outlined in the table above.

If you’re applying for a credit card for the first time, check out our related guide: How to get a credit card in the UK

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