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What type of credit card should you get?

Still looking for the right credit card for you?

Don’t worry, you’re not the only one. There are a lot of choices out there, and so it can be tough to match a card to your spending requirements.

Ultimately, different credit cards will be suitable for different people, with their personal circumstances and how they intend to use their new credit card being key considerations.

With that in mind, here are a number of situations which may suit different types of credit cards. By identifying with one more than another, it may be possible to focus on the right niche and choose the type of credit card that proves to be the best fit.

Pay off in full each month?

If you are among the 60% of UK credit card holders who pay their cards off in full each month, you may never pay interest on your credit card balance. Consumers who pay their balance in full each month may be attracted by the cashback and rewards deals on offer from credit card providers.

Cashback cards pay a percentage of each transaction to the cardholder. This is often in the form of an annual deduction from their statement. Obtaining cashback is a simple means of maximising the benefits from having a credit card.

A rewards card works in a similar way, except points are accrued instead of cashback being awarded. Points are then converted into vouchers that can be used at either a variety of retailers or a specific retailer. If you are choosing a rewards card, it therefore makes sense to check whether the retailer(s) at which vouchers can be used match your shopping preferences.

Want to reduce interest payments?

The interest rates on credit cards can be significantly higher than for other types of debt, such as mortgages. Therefore, if you have an existing credit card balance that you carry over from month to month, reducing the interest payments is likely to be a priority.  

A balance transfer card may therefore be of interest. It can offer a lower interest rate on existing debt that is transferred from another credit card. A number of balance transfer credit cards do not charge a fee for transferring a balance and also offer 0% interest rate periods of different lengths. Such a card could help someone repay their debt faster while also saving on interest costs.

Have major purchases on the horizon?

If you have major purchases coming up, finding a credit card with an introductory 0% interest rate for a set period could be a shrewd move. You could then go shopping in the knowledge that you will have an extended period for repayment, with no interest to pay on the debt until after the introductory period ends.

Be aware, however, that the introductory 0% interest rate period can be fairly short. As such, it is worth making sure that you will have sufficient time to make your purchase(s) and repay the debt before any 0% offer comes to an end.

Want to save money abroad?

Many regular credit cards charge a non-sterling transaction fee of around 3%. If you travel abroad frequently, a travel credit card that does not levy foreign transaction charges could be appealing. Many travel credit cards also do not charge an annual fee.

Travel credit cards do, however, often lack the rewards, cashback or offers that other cards may have. Therefore, it may make sense to have a travel credit card as a second card, in order to benefit from other credit card features. 

My verdict is…

With there being a wide range of types of credit cards available, considering your personal circumstances and planned spending could be worthwhile. You may then be able to narrow the selection down into a smaller pool, find the best credit card, and ultimately benefit to a greater extent from having a credit card in the long run.

Ready to find your ideal credit card? Check out our top credit card picks right now

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