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What to look for when choosing a UK credit card company

Mar 26, 2008
If you're in the process of choosing a UK credit card company to apply to, then you've probably been staggered at the amount and types of offers which are available. Making a choice can be a difficult task and it can be easy to become 'product-blind', being unable to distinguish between one offer and the next. Thanks to the vast range of offers, deals and perks, there has never been a better time to take advantage of a credit card. But what types of card are available and which one is the best for you?

However with hundreds of them out there and even more deals and reward schemes to distinguish between, how on earth do you go about choosing the UK credit card company you want to take your custom to? Everywhere you look there seems to be a credit card offering 0% balance transfers, 0% on purchases, discounts and other incentives. Choosing between them is often a difficult balancing act of spending habits, interest rates and financial objectives, but generally, the first thing to consider is how you are going to use it. It may sound obvious but working out what type of consumer you are is a critical step in getting the right deal.

If you already have existing debts on current credit cards, then you can lower the interest you are paying on that debt by finding a credit card with a low balance transfer rate. For regular spenders or those who have never had a credit card, cash-back or reward cards can give you more consumer protection than cash or cheques and can earn you money every time you spend. You can collect air miles as you use your plastic or enjoy a loyalty reward scheme that gives you cash-back on flights and shopping. If you've never owned a credit card, this can be a very beneficial way of building your credit score and increasing your viability for future and larger credit.

Reward cards offer a similar deal to cash-back cards but in this case they offer bonuses for using them, rather than cash-back. For instance, a major Hotel chain has developed a credit card that rewards its users with points for hotel stays and travel. These cards are good for those people who fulfil the criteria for cash-back cards, but might have something specific to save for, rather than having cash deposited back to their account.

For those consumers who like to 'play the game', there are many purchase cards available with extremely desirable introductory offers. If you don't mind keeping an eye on the market and changing your credit cards every six months or so, then you can really clean up by taking advantage of these offers - but this is a system only to be used by those who manage their finances attentively and efficiently. In addition, it's worth bearing in mind that lenders have got wise to those who change their credit cards frequently and often impose a transfer fee; they may even refuse your credit card application if you have taken advantage of credit card introductory offers in the past. Unfortunately, being refused credit can have a negative impact on your credit rating, causing potential damage to future applications.

Yes, plastic is fantastic - as long as you manage your card wisely and don't abuse the privilege of credit. Neither cash nor cheques offer the safety, security or rewards that a credit card can offer and no amount of crumpled fivers or creased chequebooks carry the same kudos as your very own fantastic, elastic plastic! Choosing one of these cards needn't be a nightmare either - just consider your spending habits and find the one that matches the way you shop.
About the Author
Ed Milner continues to analyse the differences between UK credit card companies and what to consider when choosing your next card. As a UK Personal Finance writer he has an excellent understanding of which credit card is best for you.
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