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Choosing a credit card company

Whether it's used to fund a house, a car or the weekly shop, British consumers love to borrow money and no more so than on their trusty credit cards.

Borrowing on cerdit cards has mushroomed over the last ten years as access to credit has improved and the market has become more and more competitive. Whilst increased competition may bring a wider choice of credit card companies and deals, the same variety of lending options leaves many borrowers confused and often choosing the wrong deal for their spending habits.

For example, if you pay off your credit card balance each month it's not going to matter what the interest rate is because you will never pay it ( assuming you aren't late with your payments). In this case, you're likely to be better off with a card that has no annual fee and rewards you in some way with cashback or loyalty bonuses.

If, like many borrowers, you don't pay off your outstanding balance each month then the interest rate is crucial to getting a good deal. The lower the better and where possible go for a 0% offer, ideally on both balance transfers and purchases. But it's important to also pay attention to the rate after the interest free period has ended as many customers either forget to pay off the balance or switch to a cheaper deal.

Before You Apply

Like any form of borrowing you will be assessed as a lending risk before being accepted as a new customer. As part of this assessment your history of credit will be checked and any defaults or arrears taken into account. This is why it's important to check your credit history report before you apply for any type of borrowing to ensure their are no errors or footprints that could cause your application to be declined or penalised with a higher rate of interest.

To view your credit history simply purchase a report from one of the same credit reference agencies used by the credit card companies such as Equifax. This way you'll see what the credit card company sees and avoid any errors or problems affecting their lending decision.

Top Tips

TIP #1:
Don't apply for more than one loan or credit card at once as you will accumulate multiple credit reference checks on your record.

TIP #2:
When shopping for a loan compare lenders using the TAR (total amount repayable) rather than the APR (annual percentage rate). The TAR is a more accurate measure.

TIP #3:
If you have a credit card balance you can't afford to settle, consider a 0% balance transfer card to save interest for 6, 9 or 12 months. Use the money saved to pay extra off your balance every month.