Before you go ahead and add a shiny new credit card to your wallet, you’ll want to make sure that the type of credit card you’re after is perfect for you and your money goals. To help you get your head around all the different credit cards and how they work, we’re running through the most common credit card aspirations.
“I want to build my credit score”
So, let’s start with an easy one. As you might have guessed, if you want to work on building your credit score, a credit builder card (or score booster as we like to call it) can help you improve your credit score over time.
Although this is essentially true with all types of credit cards, credit builder cards are available to both those with good credit scores and those who could do with giving their score a boost.
So, if you’re hoping to apply for a loan or mortgage in the future, using a credit builder card little and often and repaying it in full each month should improve your score and help you get a better rate on your future loan or mortgage.
“I want to spread the cost of purchases”
No matter if you’re planning a big purchase or you’ve had an unexpected bill this month, a 0% purchase card can help you spread the cost of big expenses in more manageable monthly payments without paying interest.
Purchase cards usually come with a 0% period for a fixed amount of time, for instance four months. This means that you can make your big purchase at the start of the 0% period, then pay it off across that time without being charged interest. Just remember that if you don’t manage to clear your balance by the end of the 0% period, the card’s usual interest rate will apply to any remaining balance.
“I need a break from my monthly repayments”
Now and again our monthly budgets can become a little stretched. If you need a short break from your credit card bill, for a small fee you could move the balance from your current credit card to a balance transfer card and not be charged interest on your balance for the card’s 0% period.
This could give you the window you need to get back on top of your finances and resume making repayments at the end of the card’s 0% period. Just remember that your new balance transfer card’s APR will be applied to any remaining balance at the end of your card’s 0% period. If you still need a little more time before you resume making your card repayments, you could look to switch to a new balance transfer card before your card’s 0% period comes to an end.
“I want to reduce my credit card debt”
If you want to actively start reducing your credit card bill without your debt increasing, a balance transfer card is the type of credit card could give you the opportunity to reduce it.
If you transfer your card balance to a balance transfer card for a small fee, you won’t have to pay interest on it for the card’s 0% period. This could give you the breathing space you need to actively chip away at your credit card bill without it increasing further. Keep in mind that when the card’s 0% period ends, the card’s usual interest rate will apply.
“I want to benefit from additional perks”
If you’re looking for a credit card that comes with benefits such as airmiles, discounts on brands or the ability to collect points to trade in for concert tickets or travel upgrades, then a rewards card is for you.
These credit cards can come with high interest rates as well as annual or monthly fees, so it’s essential you know the ins and outs of the card’s terms and conditions before you apply. That way, you can be sure that you’re getting the most out of your chosen rewards card and that you won’t get any unwelcome surprises in the future.
“I want to avoid foreign transaction fees”
Credit cards that allow you to use them abroad without incurring any fees are called travel cards. For example, Zopa credit cards come with a promise of no fees abroad. These can be particularly handy if you’re planning to go abroad a few times a year. Accordingly, they’ll save you money on foreign transaction fees at chip and pin machines and ATMs. It can also be helpful if you want to reduce the amount of cash you’re carrying.
Think you now know which type of credit card is right for you?
From building your credit score to spreading your costs, knowing what you want out of a credit card is the best way to help you find out which cards are right for you.
Want to quickly find out which cards you’re eligible for? Check your credit card options with us now without harming your credit score.