Comparing credit cards | Protection and rights offered with credit cards

Credit cards: overlooked rewards

Some credit cards are overlooked because the APR or introductory offer isn’t as eye-catching as its competitors’ – be sure to get a closer look

When searching and comparing credit cards, many consumers search for the best balance transfer credit cards or the best credit cards for improving bad credit.

However, there are some credit cards that don’t completely follow the rulebook and – if you know what details to look out for – could improve your finances in the long run.

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Our guide will help you identify the rewards and benefits that often get overlooked when comparing credit cards.

Credit cards for loans

If you’re planning on making a big purchase (but not too big), such as a television or furniture, then a low APR or 0% purchase credit card is usually the way to go.

Instead of taking out a loan, you can make an interest-free or low-interest purchase on your credit card.

One problem with 0% purchase credit cards is that the introductory interest-free period is sometimes used to simply pull in consumers for the long haul, which then includes paying a larger APR.

However, if you manage your money well and are sure that you’ll be able to pay it off in the 0% purchase period, then it could work in your favour.

Meanwhile, low APR cards can sometimes work out better if you’re confident of paying off your debt within a reasonable amount of time.

Typically, low APR cards come in at just under 8% APR.

Combining both worlds, the Rate for Life credit card by MBNA gives consumers a low APR introductory offer of 6.9% that can be maintained for the entire repayment term.

This means that if you make a purchase within the 90-day offer period, you can continue paying back the debt for as long as it takes at the 6.9% rate.

Obviously, there’s no point in taking the credit card if you don’t intend to use the offer, as you’ll be placed onto the higher 16.9% rate.

There’s a whole range of credit cards that can be used as a 0% or low-interest loan, so it’s worth shopping around for the right introductory rate or long-term deal that suits your needs.

Credit cards for bad credit

Credit cards for people with bad credit are widely available on the market as consumers with less than perfect credit histories seek to improve their status.

These credit cards are usually open to people who have had County Court Judgments against them and who may have missed payments or even faced bankruptcy in the past.

This availability comes at the cost of a higher than average APR.

Consumers might just be looking to get some quick and easy credit to tide them over until next payday and the high APR of the bad credit cards market can make these cards less appealing.

When comparing bad credit cards, it’s worth looking past the high APR before coming to a decision, as you may miss the details that could help you reap better rewards.

For example, the shout Visa Card has a high APR of 627% but does not actually charge penalty fees for late payments or for going over the limit.

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Decide whether or not the card suits your lifestyle and financial requirements

The monthly repayments are also designed to be predictable and responsible, which can help consumers manage their finances better.

While consumers turn to payday lenders for easy credit, they risk losing control of their financial situation and worsening their credit status with unexpected debts spiralling.

Credit cards such as shout require debit card details as a pre-condition for approval, meaning the repayments of £15 for every £100 come out of your account automatically each month.

Other benefits with credit builder cards can include interest free purchases.

The Black Diamond Credit Card has a higher than average 59.9% APR but comes with up to 56 days of interest free purchases and the opportunity to build up your credit limit.

It’s important to note that the interest free purchase period is an introductory offer and if you don’t stay on top of your finances, can come back to hurt you with that 59.9% APR.

However, the opportunity to increase your credit limit is there as an incentive to keep up your repayments.

Credit cards for everyday use

Being able to keep your finances under control while still being able to make purchases are important features of the everyday credit card.

Long balance transfer periods can be appealing but often come with large transfer handling fees, so finding a happy medium can be quite time consuming.

For instance, the Barclaycard Platinum with 28 months balance transfer is perhaps the longest balance transfer credit card on the market but adds on a 4% handling fee (although this can be reduced to 3.5% by a refund).

This means that although you have over two years to pay off your balance with no interest, you could be paying a large chunk upfront for the privilege.

There’s another Rate for Life credit card from MBNA, which is more tailored for everyday use rather than major purchases.

With a 0% handling fee on balance transfers it provides a low rate of 6.9% for as long as it takes to pay off the balance.

Although there is no window of zero interest on balance transfers, you do get a low rate “for life”, which can be useful for helping to keep in control of your finances in the long term.

Finding the best credit card for you

Ultimately, finding the best credit card for you comes down to checking all of the details, not just the top credit cards in the comparison tables, as these are often based on the longest balance transfer period or the representative APR, rather than additional benefits you could get.

Assess what you would need a credit card to do for you: transfer a balance, make a purchase with a 0% term, improve your credit rating, and so on.

After that, have a look at a credit card comparison table for that category and check the pros and cons of each card.

Pros are likely to include the key features such as length of the balance transfer period or 0% purchase period, if any, and various reward schemes and customer service benefits.

Cons will often include details such as exclusions – who can get this card and who can’t – and any features that may restricted many consumers.

Weigh these two areas against each other and decide whether or not the card suits your lifestyle and financial requirements.

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