How to choose a credit card

Taking out a credit card could feel like a big commitment, especially if it’s your first one, but this guide should help you to understand the basics and boost your confidence.

Understanding credit cards

What do you want your credit card for? This section explains the credit card types which could be available, and the main differences you should know about.

Check your credit eligibility

Each lender sets their own conditions on who they’ll lend to. This section explains what lenders look for and how to boost your chances of being accepted.

Applying for and using a credit card

This section covers tools and tips you can use to protect yourself when applying and using your credit card, including how to protect your credit score.

1. Understanding credit cards

What is a credit card?

Credit cards all offer the flexibility to borrow money now and pay it back later. But there are lots of different types.

Some are designed for transferring existing credit card balances, transferring money to a current account, or even helping you to earn rewards. But, if you're a first-time credit card customer, you might just need a card to help you to manage everyday expenses.

A credit card could also be handy to have as a back-up for emergencies, or if you need to spread your repayments for larger purchases.

The difference between debit and credit cards

Think through your options

  • Does this option suit my borrowing needs, or should I consider alternatives, such as a loan or car finance?
  • Will I be able to make repayments, even if my circumstances change?

Other borrowing options

Types of card

When choosing your credit card, it’s useful to understand how a credit card works and the options which might be available to you.

  • If you’re planning a large purchase or expense, like home improvements or buying a car, need a card for everyday spending, or just for emergencies, a credit card is a flexible way to borrow and spread repayments over a few months when you need to.

    It’s useful to know that you’ll pay interest on card purchases unless:

    • A 0% p.a. promotional rate for purchases applies.
    • You pay off your full statement balance every month.

    Make sure you read through and understand the interest rates which apply to your account. You might have a set number of days from the date your account is opened to use any introductory interest rates on card purchases – usually around 60 days. After that, and when any introductory interest rates expire, your standard interest rates will apply instead.

    You could be offered further promotional interest rates in future, as long as you continue to use and manage your credit card carefully.

    When a Halifax credit card application is approved, your PIN will be delivered by post within five working days. Your new card will follow separately, arriving within seven working days. You’ll need both before you can make in-store purchases.

    If you’d like to change your PIN, or you need a reminder, you’ll find full details in our guide to making changes to your credit card account, including information on how to view your PIN online using the Halifax Mobile Banking app.

  • If you have a limited credit history, you might have a low credit score, which is where a ‘credit builder’ card could help.

    Although they usually offer lower credit limits and higher interest rates, by using one of these credit cards, staying within your credit limit and keeping up with your repayments, over time your credit score could improve. Eventually, you could switch to a credit card with lower and longer lasting interest rates.

  • With a balance transfer, you could move existing credit and store card balances to a single credit card. With everything in one place, your outgoings could be easier to manage.

    At Halifax, you can request a balance transfer from most credit cards and store cards which display the Mastercard®, American Express®, or Visa® logos, but not from loan companies, bank accounts or other Halifax credit cards. Transfer fees may apply.

    Of course, this type of credit card is only really useful if you have credit and store card balances to transfer.

    If you are completing transfers, it’s useful to know that you’ll have a number of days from the date your account is opened to use any introductory interest rates on balance transfers – usually around 60 days. After that, and when any introductory interest rates expire, your standard interest rates will apply instead.

    You could be offered further promotional interest rates in future, as long as you continue to use and manage your credit card carefully.

    At Halifax you can request balance transfers as part of your application, or once you’ve received your credit card if you’d prefer.

    More on balance transfers

  • Some credit cards offer the option to transfer money to your UK current account, which could help you to manage unexpected bills, or to make cash only purchases. Transfer fees may apply.

    It’s important to know, if you make a purchase using money transferred from your credit card to your current account, the purchase will not be protected under Section 75 of the Consumer Credit Act 1974 – unlike some credit card purchases.

    You’ll usually have a number of days from the date your account is opened to use any introductory interest rates on money transfers – usually around 60 days. After that, and when any introductory interest rates expire, your standard interest rates will apply instead. 

    You could be offered further promotional interest rates in future, as long as you continue to use and manage your credit card carefully.

    At Halifax, money transfers are available on selected cards and only when your account is set up.

    More on money transfers

  • Rewards – some credit cards offer points or cashback when you spend, although you could pay fees for these benefits. For example, an annual fee might apply, which should be outlined in the features of the credit card you’re considering.

    Do some calculations, based on your planned spending, to see if the benefit is worth the fee.

    Low rates – some credit cards offer lower than average standard interest rates, instead of 0% introductory interest rates which expire after a period of time.

    It does mean you might pay interest from the start, but there usually aren’t limits on when you spend or transfer, and the interest rates and costs may be easier to keep track of.

    It really depends how you plan to use a low rate credit card. If you pay your credit card statement balance in full and on time every month, you won’t be charged any interest, but other fees and charges could apply.

  • Some credit cards offer benefits tailor-made for travellers, like low fees when you use your credit card outside of the UK and for non-Sterling transactions. A travel credit card could be a good option if you’d prefer to carry fewer cards and less cash when you’re abroad.

    More on travel credit cards

Other things to think about

When looking at credit cards with different interest rates and benefits, it might help to compare:

  • The APR could help you to estimate the cost of your borrowing over the course of a year.

    A representative example is provided to show the typical costs if you borrowed £1,200, based on the card purchase interest rate only. This doesn’t account for introductory interest rates or all transaction fees so the actual costs could vary, depending on how you use and manage your new credit card.

    More on APRs

  • The lowest and longest lasting introductory interest rates are usually offered on one transaction type, so think about the main reason you need a credit card to help you to narrow down your options.

    You might notice that some introductory interest rates are advertised as being available for ‘up to’ a certain number of months. That means you could be offered a shorter duration instead, based on an assessment of your personal circumstances and credit history.

    More on introductory interest rates

  • As a first-time credit card customer, you might not be offered a large credit limit to start with. Credit limits are based on an assessment of your personal circumstances and credit history.

    If you use your credit card, stay within your credit limit and keep up with your repayments for a period of months, you could apply to increase your credit limit. Lenders might offer you a credit limit increase if they see that you’re managing your account well.

    More on credit card limits

  • In addition to interest, fees and charges can add to the cost of borrowing. Fees might apply to some transactions, including balance and money transfers, cash advances and non-Sterling transactions. Annual fees could also apply to some credit cards.

    Additional charges might apply if you don’t manage your account well, including late payment or over limit charges.

    More on fees and charges

2. Check your credit eligibility

Are you eligible?

To be accepted for a Halifax credit card, you must:

  • Be a UK resident, aged 18 or over, with a regular annual income.
  • Be free from County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy.
  • Not be a student or unemployed.
  • Not have been declined for a Halifax credit card within the last 30 days.

When you apply, you’ll need to give us:

  • At least three years’ UK address history.
  • An email address and phone number.
  • Your primary bank account number and sort code.

What are lending decisions based on?

 

Your credit record

Credit reference agencies hold information about you and your financial past, issuing you with a credit score. Lenders access this information, which helps them to make decisions on credit applications.

Affordability

Lenders also consider what you can reasonably afford to repay for the foreseeable future, based on things like your income and the total amount of credit that’s already available to you.

Current and past accounts

Lenders usually keep records about accounts you’ve held with them in the past, including information about how well they’ve been managed.


Do you have a low credit score?
 

As well as the details you provide in your application, lenders access information from independent credit reference agencies, including your credit score.

If you’ve never had credit, or have very limited experience, you might have a lower credit score, meaning lenders will find it difficult to assess how well you’ll manage it. That also means, you’ll be less likely to get the lowest and longest lasting interest rates. You may not be eligible at all.

It’s a good idea, especially if you’re planning to apply for credit, to check the details held by each credit reference agency is accurate. You could apply to have the information corrected if it’s wrong.

If you want to improve your credit score and future eligibility, there are some things you can do.

More on credit scores

Building your credit score

It might take some time, but there are a number of things you can do to boost your credit score:

 

  • Manage accounts carefully
    Keeping up with payments on store cards, mobile phone contracts, TV subscriptions and other household bills, could all help. You’ll need at least one account offering you credit, for a period of six months or more, to generate a credit score you can build upon.
     
  • Use a bank account
    Setting up Direct Debits to make regular payments can contribute to your credit score over time. Just make sure there’s money in your account to cover any payments, or you could find your credit score is damaged rather than improved. Managing an arranged overdraft well could also help.
  • Register to vote
    Being on the electoral roll is one way your home address is validated, which can help to improve your credit score.
     
  • Joint accounts count
    Joint financial commitments, like bank accounts, mortgages and even utility bills, create a link between you and your partner. Even if the joint accounts themselves are managed well, if your partner’s credit score is low for another reason, that could impact your ability to get credit. You have two options here. Either focus on improving both of your individual credit scores, or try to keep your finances separate.

3. Applying for and using a credit card

Before you apply

It’s important to know that applying for credit could affect your credit score, especially if a full or ‘hard’ credit search is completed and you’re declined.

Look for eligibility tools

Many lenders now provide an eligibility checker to help you to find and compare cards you’re likely to be accepted for, without impacting your credit score. The Halifax version is called Simple Check.

Tips on managing your credit card

  • Making payments. If you don’t make payments on time or go over your agreed credit limit, in addition to fees and charges, you could lose any introductory or promotional interest rates on your account. In that situation, your standard account interest rates and fees will apply instead.
  • Minimum payments. You must make at least the minimum payment on time each month, but we recommend paying as much as possible to reduce your balance and limit any interest costs. This could also prevent you from falling into persistent debt.
  • Credit score. Your credit score could be affected if you don’t keep track and manage your account well, making it harder for you to get credit again in future.
  • Interest. You’ll pay interest on purchases unless a 0% promotional rate applies, or you pay off your monthly statement balance in full and on time every month.
  • Stick to a budget. It’s a good idea to only borrow what you really need and can reasonably afford to repay. Build your understanding of money basics by checking out our series of guides and tools.

A summary on how to choose a credit card

Think about your borrowing needs and available options, including loans or car finance.

  • When comparing credit cards, as well as introductory interest rates, it’s important to check for fees, charges, and the representative APR.
  • To apply for a credit card, you must be a UK resident aged 18 or over. Other conditions apply.
  • If you’re new to credit your credit score could be low. You might need to take steps to improve it to get the card you really want.
  • Use an eligibility checker to find and compare cards before you apply, without impacting your credit score. It’s called Simple Check at Halifax.

Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628.