Credit cards

Your guide to
credit cards

Helping you to understand credit cards

A credit card is a way of borrowing money that lets you buy things up to an agreed limit and pay for them later, either in one go or in chunks.

Using a credit card in a shop works in the same way as a debit card, but there’s an important difference to remember. With debit cards, you’re spending the money that’s in your bank account. But with credit cards, you’re borrowing money from your credit card provider.

That means your credit card spending – and any interest and fees – is the total amount you owe.

Things to remember

A credit card can be an expensive way of borrowing, so you should try and pay your full balance every month. If you don’t pay off your balance in full, you will be charged interest in most cases.

If you aren’t able to pay your balance in full, you should make sure that you’ve paid your minimum payment, as missing a payment can harm your credit score and mean additional charges from your card provider.

The representative example is a handy wee tool that banks use to help you compare the cost of borrowing in one standard format. It shows you a few important bits and pieces, which we’ll run through in here to keep you right.

The first is the purchase rate, which is the interest rate you’ll be charged when you buy most goods or services on the credit card you’re looking at. Remember, if you pay off a credit card balance in full every month, you will not be charged interest.

You’ll also see the Representative APR, which is the annual percentage rate that’s used to indicate the full cost of borrowing.

Next, you’ll see the assumed credit limit, which is a guide limit that all bank’s need to quote to allow you to compare different cards. We tend to use £1200 as a guide, but the actual credit limit you’ll get will depend on your own circumstances when you apply.

Things to remember

Most banks will treat your application on an individual basis, which means the rate and terms you get will not always be the same as the rate you see before you apply.

A balance transfer is when you move a credit card balance from one credit card provider to another, often with a lower (or 0%) rate of interest for a set period of months.

You may wish to consolidate existing credit and store card debt by transferring your existing balances to another new card with a lower rate of interest.

Typically, you can request balance transfers up to a total of 95% of your available credit limit, although this varies depending on card provider.

This type of offer could help reduce your monthly credit card payments and/or clear your debt quicker, but it’s important to note that there may be a fee to transfer a balance and you should consider the costs you will pay when any introductory offer expires.

If you currently hold a balance on a credit card and want to get an indication of how long it will take you to repay the balance, use our credit card repayment calculator.

Banks will use your credit score to decide whether to lend you money. They may also use it to decide how much to lend to you and what interest rate to charge you.

They access a credit file that gives them information about the payments you make to any loans, credit cards and mortgages each month. And they can also see the way you run your bank accounts.

There are a number of ways your credit score could be harmed.

Applying for credit too often

Having lots of debt

Missing any debt repayments

Remember, if your credit card provider gives you a limit that’s more than you need, you can ask them to lower it. This is a good way to avoid the temptation to spend.

Things to remember

Credit scoring is used for more than just credit cards and loans. You might need a good credit score to get a mobile phone contract, a mortgage or insurance. So it’s important to be aware of your score. You can check yours through agencies such as Experian.

We know there are lots of different credit cards out there. That means it can be quite tough to find the right one for you. Let's start by having a wee look at the most common types of credit cards.

Incentive based credit cards

Some credit cards will reward you in return for spending money on the card. You could be offered points, cashback, vouchers or even air miles by the provider. These cards can be really helpful if you are someone who likes to repay your balance in full each month. Remember to consider interest costs as well as any incentives the card provider offers.

Travel benefit credit cards

Some credit cards offer travel benefits like no foreign transaction fees or insurances. This could be a nice wee saver if you are someone who likes to go on holiday every so often. 

Low rate credit cards

Low rate credit cards are designed to help you save money on interest when buying things on your credit card. 

Student credit cards

These credit cards are there to help students through their studies by giving them a useful safety net for any unplanned expenses. This type of card will tend to have a lower credit limit.

Things to remember

See our range of credit cards to find out more about the cards we offer. Over 18s only. Eligibility criteria applies.

There's no need to chance it

Our eligibility checker allows you to find out whether you'll be accepted before you apply with us. It takes around 2 minutes and it won't harm your credit rating.

Other ways we can help

Credit card, overdraft or loan?

If you need to borrow money and you are not sure which product might be right for you, use our helpful tool to compare the features of different types of lending.

See our credit card range

We have a range of credit cards that could meet your needs. See our range and compare the benefits today. Eligibility criteria applies. Over 18s only.

Can we help with anything else?