Types of credit cards

understanding the credit card landscape

There are many different types of credit cards out there, so making sure that you’ve chosen the best one for you and your needs can be tricky.

Often it depends why you want it – is it to spread the cost of a large purchase, to build up your credit history, or for emergencies if you’ve run of cash? Experian CreditMatcher helps you compare different cards so you can see what would work best for you. Don’t forget, we’re a broker not a lender.

To apply for any credit card, you need to be over 18. Typically the lender will check your credit information through a credit reference agency such as Experian, and if you’re approved you’ll be given an interest rate and a credit limit based on your credit history and any other information the lender may have.

What kind of credit cards can I apply for?

‘Standard’ credit card

These are ordinary credit cards with no frills, some may have specific unique benefits, such as fee-free currency exchange. They will feature an APR (annual percentage rate), which is a representation of the cost of borrowing plus any other associated fees.

Premium cards

Often known as ‘Gold’ or ‘Platinum’ cards, these are standard credit cards but may come with a higher credit limit or extra benefits such as travel insurance. You may need to pay an annual fee for one of these, and you’d probably need to have a good credit score too.

0% balance transfer card

A card that allows you to transfer an existing credit card balance, to one with little or no interest, typically for a small transfer fee. It’s quite common now to move credit card debt you already have to another card.

0% purchase card

These are interest-free cards that, as long as you make the minimum monthly payment, allow you to spend on the card without having to pay interest on the balance for as long as the promotional rate.

Credit builder cards

These cards could be useful to help build you credit history and often have low credit limits to start with, and perhaps a high APR, but paying off the bill in full each month can help show lenders that you’re reliable.

Cash back credit card

These credit cards allow you to earn money for everything you spend on the card, in varying amounts usually around 1-2%, with some higher limited period introductory rates.

Store card

Store cards can be useful if you shop in the same shops or chains. They often come with higher interest rates than standard credit cards and lower credit limits, but usually have special offers for cardholders.

Affinity cards (or reward cards)

The credit card companies typically partner with other organisations to allow you to a) benefit a cause close to your heart every time you use it or b) benefit from customer loyalty by building up reward points or discounts.

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