Applying for a credit card

How do credit cards work?

You can spend money on a credit card up to a defined limit set by the credit card provider. You use a credit card in just the same way you would a debit card, to buy things and pay bills – the main difference is that with a credit card you’re borrowing the money you spend from the card provider rather than using money from your own bank account.

If you pay your balance off in full and on time every month, you usually won’t have to pay any interest. If you can’t pay it off in full each month, it’s important to at least make the minimum repayment as missing even one payment can cost you more in charges and negatively affect your credit score.

Credit cards are advertised with an annual percentage rate (APR) that represents the total annual cost of the credit, including interest and fees.

How do you know what credit card to apply for?

Credit cards can seem complicated, with varying fees and interest rates, lots of different types targeting different customers, and a liberal dose of acronyms to confuse things even more.

Here are some things to look at and understand before you apply for a credit card.

Type of card

There are several different types of credit card so it’s important to know what you want the card for and how you can make the most of the offers available. Different types of credit card include:

  • Balance transfer cards – if you already have a credit card you owe money on, you can transfer that balance to a new card that offers 0% interest on the balance for a fixed period. Balance transfer cards usually incur a fee to make a transfer.
  • 0% purchases cards – some cards don’t charge any interest on your purchases for a fixed period, meaning you have more time to pay the balance without being charged.
  • Reward cards – these can be anything from cashback cards that pay you back a percentage of the amount you spend on your card, to air and travel mile cards that give you discounts on flights and hotel stays, points cards that give you points you can exchange for goods and services, and retail rewards cards that give you added bonuses with specific retailers.
  • Credit builder cards – designed for people with no or poor credit history, they can be easier to get but often come with a higher interest rate. Managing one responsibly can help build your credit score over time.

Annual Percentage Rate (APR)

The APR is the total annual cost of using your credit card, including interest rates and fees.

Other fees and charges

Some credit cards charge an annual fee to use them, while others such as balance transfer cards can come with account opening fees. It’s also important to understand the charges you’ll be hit with if you make a late payment, go over your predefined credit limit or withdraw cash.

Minimum repayments

Every card will impose a minimum repayment you have to make every month, as long as your balance isn’t zero. If you can’t pay off your balance in full each month, you must at least make your minimum repayment, so you should always know how much it is and when it’s due.

Credit limits

Different cards and providers will set different credit limits depending on your financial circumstances. Make sure the card you apply for has a suitable limit, whether it’s high enough for what you need or low enough so you don’t spend beyond your means.

Interest-free days

Most credit cards come with an interest free period of up to 56 days from when you buy something, depending on how close you are to your payment date. You’ll be able to see how many days a card has interest free in its terms and conditions.

What do you need to do to apply for a credit card?

To start with you can check your free Experian Credit Score to see what condition your finances are in and whether you’re creditworthy. If your credit score isn’t good, there are steps you can take to improve your credit score before you apply.

Credit card providers will look for certain financial behaviour before approving your application. Here are some things to do before you apply:

  • Stay below your limits – if you have other loans or credit cards close to their balance limit, other credit card providers may consider you a higher risk.
  • Keep up with your payments – card providers will take a good look at your payment history and missed payments will really hurt your chances of getting a new card. Even a single missed payment can have a negative effect.
  • Don’t apply for lots of credit – applying for several cards or loans over a short period will leave a mark on your credit report and damage your credit score.
  • Build up a credit history – don’t avoid credit altogether as having no credit history makes it hard for card providers to determine your creditworthiness, as they don’t have much information to base a decision on. Having a healthy, active credit history on the other hand will help.

How do you know if you’re eligible for a credit card?

As well as researching the features and benefits of a credit card before you apply, it’s also important to know if you’re eligible to get it. This helps reduce the number of applications you make and so keeps your credit score healthy.

You can see which credit cards you’re more likely to be accepted for when you compare with us. When you search for a credit card with Experian, we’ll return a range of results based on your application criteria. Alongside each result, we include an eligibility rating that indicates your likelihood of being accepted, based on your credit information and the lender’s criteria. Remember, we’re a credit broker, not a lender† – we can help you find deals, but we can’t offer credit or approve you for it.

Want to know more? Find out how we work out eligibility.

How do you apply for a credit card?

Applying for a credit card is usually quite straightforward. Typically, you have the choice to apply online, or in person at one of the lender’s branches. When you compare credit cards with Experian, you’ll find a link next to each result that takes you to the lender’s website.