Types of UK Credit Cards

By David Barren

We all have different financial needs and therefore, the ‘best credit card’, may mean different things to different people. Some may require credit cards to settle other loans; some may use them for purchases, while some may want certain credit cards for reward points. The credit card industry identifies these market needs and offers solutions to most of them, if not all. Let us evaluate some key utility driven credit cards the UK market offers.

Purchases

One of the standard uses of credit cards includes making purchases when you don’t have cash or don’t want to use it. This is in effect an instant loan. To the benefit of users, a credit card issuing bank also shares the responsibility of the delivery of your goods purchased via its credit card. The instant credit deals have started to sound more exciting as now initial 3-6 months of purchases are available at 0% interest rate. You must however, settle all your dues within these interest free 3-6 months, as beyond this period, you will have to pay the standard APR. You may continue enjoying 0% interest rate purchases by changing your card every 6 months.

Balance transfer

If you want to clear your outstanding debt, balance transfer credit cards are a good bet to save you from paying hefty interest rates. The UK credit card market extends two types of credit cards for shifting your dues. One type is where you get 0% interest rate in the initial 6-12 months of card’s use. Post 6 months, you pay a higher rate of interest for the outstanding on your balance transfer card. Therefore, the trick here is to change your credit card every 6 months in order to continue enjoying 0% interest rate. The other type of balance transfer credit card is where you pay 4-6% APR for as long as you hold the card. If you make any extra purchases from your card, you are charged the prevailing APR on it. However, when you pay off some part of your dues, the lower rate balance is settled first while the higher rate outstanding balance (purchases) continues to swell and the interest rate advantage for the user eventually trades off. The trick here evidently is to refrain from any purchases on your balance transfer credit card.

Rewards/cash back

There are cards that give you reward points on the amount you are spending via their credit card. You may use these reward points to enjoy cash back on your card. However, usually these cards attract a higher rate of interest than their peers. Therefore, do confirm the interest rates from your credit card bank.

Compare the Best UK Reward / Cash Back Credit Cards

Low Standard Rate

.If you desire to use your credit card for a long time, you must evaluate the options offering you a low standard APR which is 14.9%-15.9% as per the industry standards.

Standard use

If you require credit cards for multiple purposes then standard credit cards are the right choice. Many value for money credit cards are available in the market today, offering 0% interest for the balance transfer in the initial 12 months, 0% interest on purchases in the initial 3 months, standard APR of 15.9% and no annual fee

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