Different types of credit cards explained

Woman making a contactless card payment in a coffee shop

No matter if you’re new to the world of credit cards or you’ve got a fair few in your wallet, getting to know the different types of credit cards is essential. This is because by knowing exactly what each type of credit card does, you can choose the right one to help you reach your money goals.

Credit builder cards

Credit builder cards (or score booster cards) are available to those who have high and low credit scores. They basically do what they say on the tin – “build up” your credit score. This is because if used little and often and repaid in full each month, over time you can prove that you’re reliable when it comes to borrowing and give your score an extra boost.

As credit builder cards are often available to more people, they can come with slighly higher interest rates than your other credit cards. That’s why it’s a smart idea to make sure you pay off your card in full each month. After a while, your credit score should get a boost, improving your eligibility for loans, credit cards and mortgages in the future.

Balance transfer cards

If you’re currently paying interest on a credit card, you may be able to save some cash by transferring the balance to a balance transfer card – often for a small fee. Balance transfer cards usually come with an initial 0% period where you won’t pay interest on your balance for a set amount of time, for instance for six months.

This could give you time to pay off what you owe without your debt increasing. Just remember, at the end of the card’s 0% period, the card’s usual interest rate will be applied to any remaining balance.

0% purchase cards

Need to spread the cost of a big purchase? Well then, this type of credit card might be for you. 0% purchase cards come with an initial 0% period where you won’t be charged interest on your spending.

So, if you’ve got a big purchase or series of small purchases coming up and you need to spread the cost, you can pay off your spending monthly rather than all in one go. However, just like with a balance transfer card, if you haven’t cleared your balance by the end of the 0% period, the card’s usual interest rate will apply.

Rewards cards

Rewards cards often come with bonuses for spending on them, such as cashback extras or building up points that can be spent on things like concert tickets or airmiles. However, they can come with annual fees and high interest rates, so it’s essential you know the finer details of owning one before you apply.

Travel cards

Travel currency cards are designed to help you avoid paying high fees when traveling abroad. Some cards act like a normal credit card, however others you can pre-load with money for spending from your current account before you jet off.

From spreading the cost of purchases to building up your credit score, there’s a type of credit card out there for everyone. Want to check your credit card options? Have a quick look now without harming your credit score.

Take a look through our recommended credit card lenders including credit cards by Zopa, Santander, and more.

Not sure which credit card to use to reach your financial goals? In this blog, we run through how to decide which type of credit card is perfect for you.

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