Credit Cards for Beginners Explained UK | Do's and Don't | Type of Cards

A credit card is a payment card that allows you to borrow funds from a pre-approved limit set by the bank to make purchases. You must repay the borrowed amount each month, either in full or in part, with interest applied on outstanding balances.

In the UK, common types of credit cards include balance transfer cards, purchase cards, reward cards, cashback cards, travel credit cards, and credit builder cards.

A balance transfer card helps you move existing credit card debt to a new card, often with a lower or 0% interest rate for a limited period, making it easier to pay off your balance.

Credit builder cards are designed for people with no or poor credit history. By using the card responsibly and making timely payments, you can demonstrate good financial habits, which might improve your credit score over time.

Cashback cards offer a percentage of your spending back as a cash reward. They are ideal for regular spenders looking to earn while they spend.

Yes, credit cards may have various fees, including annual fees, late payment fees, balance transfer fees, foreign transaction fees, and cash advance fees.

Interest on a credit card is calculated based on your outstanding balance at the end of each billing cycle. The interest rate is often applied daily to the balance, and it accumulates until paid off.

A credit limit is the maximum amount you can borrow using your credit card. It is determined by the card issuer based on your creditworthiness, income, and credit history.

The minimum payment is the smallest amount you need to pay each month to keep your account in good standing. Not paying the minimum can lead to late fees, penalties, and damage to your credit score.

To manage your credit card spending effectively, set a clear budget, track your spending, pay your balance in full each month to avoid interest, and monitor your statements regularly for any unauthorized transactions.

Missing a credit card payment can result in late fees, increased interest rates, and potential damage to your credit score. It is essential to pay at least the minimum due by the payment deadline.

You can apply for a credit card online through your bank’s website or visit a bank branch. You’ll need to provide personal and financial information, and meet the eligibility criteria set by the issuer.

A credit card statement is a monthly summary of your credit card activity, showing your transactions, the balance due, the minimum payment required, the payment deadline, and any fees or interest charged.

Yes, most UK credit cards can be used abroad, but be aware of foreign transaction fees that may apply. Consider using a travel credit card that offers fee-free transactions for international purchases.

If your credit card is lost or stolen, immediately contact your card issuer to report it. They will block the card to prevent unauthorized use and issue a replacement card.