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Credit Cards

  • Perfect for credit building
  • Guaranteed credit limit
  • Check your eligibility with no impact to your credit score
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This won't affect your credit score

Representative example: Amount of credit £1,200. Interest rate: 49.0% pa (variable) Representative 49.0% APR (variable)

What are credit cards

Credit cards are a flexible form of borrowing where you purchase products or services and then pay for them at a later date on or before the date when your bill is due. Credit card balances can be paid in full, or you can spread the cost over monthly payments to clear the balance. Unlike a loan, where you would be expected to make monthly payments to clear the balance.

If you don’t clear the outstanding balance on your credit card, then the card provider will charge an interest rate on the remaining amount. The interest rate charged on the card can be influenced by a number of factors, including your credit rating, your individual circumstances and the card provider’s own criteria. If you have a better credit rating, you may be eligible for a broader range of credit cards and interest rates.  

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Features of a credit card

The features of a credit card are likely to vary from one provider to another. Some providers may incentivise the applicant with additional features such as supermarket points or rewards on every transaction or cashback options. For some, dependent on their credit rating, providers may offer credit building options, these are usually cards with a higher rate of interest but a lower credit limit.

Purchase credit cards - there are some credit cards out there that offer 0% interest on purchases for a limited period of time, so if you want to buy something big, you can then pay it back during the 0% period without being charged interest.

Balance transfer credit cards – these allow you to move all or some of the debt from one or more credit cards to another. You may decide to do this because you find another card with a better interest rate; you may even find a balance transfer credit card with an interest-free period. 

You may have to pay a handling fee to make your balance transfer which is charged when you make the balance transfer and then added to the balance. If you’re looking for a credit card where you could do an interest-free balance transfer, it is worth looking at all the options available including how long the interest-free period will last, and what rate you will be charged at the end. If you are in a position to pay off the balance in time with the interest free period ending, then it is a good idea to do so and will save you money in the long run as you won’t then start paying interest at the end of the interest-free period.

Credit builder credit cards – these intend to help you build your credit score. It may be that you don’t have any existing credit, so by having a balance and paying that down, you are able to show good repayment behaviour and build your credit record.

Everyday spending credit cards - these are cards which you can use for everyday spending like your food shopping, travel and fuel. Ideally you should pay your balance in full when you get your bill each month. 

Some credit cards come with an accompanied cash withdrawal fee. Essentially, like a debit card, you can use your credit card to withdraw cash from an ATM or get cashback. Some credit card lenders (including 118 118 Money) will charge a fee  for this. 

This isn’t an exhaustive list of what people use credit cards for but gives an idea of what is available.

Guaranteed Rate and Credit Limit

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What credit cards can I apply for?

If you want to know what credit cards you can apply for, or what credit card deals are available, you could use a comparison website to tell you which ones you are eligible for. What’s available will really depend on your credit status and what you want to use the card for. Many lenders also offer a pre-application eligibility checker, meaning you can check your eligibility before completing a full application to see if you're likely to be approved. This doesn't impact your credit score - however a full application does require a full credit check which leaves a footprint on your credit file. Comparison sites also offer you insights into what the interest charges and representative APR is amongst different providers.

What are the advantages of a credit card?

There are pros and cons to most things - whether credit cards are beneficial to your circumstances or not will depend on how you use it and if you have good repayment behaviour. Positively, certain credit cards offer an interest-free period to make purchases, some will offer fee-free cash withdrawals, others will offer spending abroad without any additional fees. Then there is the added protection on purchases which comes from the Section 75 law (more on that below). Remember, good repayment behaviour can also help you to build a good credit history.

Conversely, there can be a few cons to credit cards if you don’t establish good habits from the off. Spending to your limit and only ever making the minimum repayment is not the best habit to get into as it means you will always be carrying debt. If you open several cards and are not paying them off, then it means you are expanding your debts. Some cards also come with additional costs - for example annual fees, so always do your research to establish what card best serves your individual circumstances. 

When do credit cards charge interest?

If you pay off your balance in full every month by your payment due date, plus any transaction charges that your credit card provider may charge you, then you won’t get charged any interest at all.

However, if you don’t pay off your bill in full by the payment due date or just make the minimum payment then you will be charged interest on the balance from the date the transaction shows on your account. Credit card purchases won’t always appear on your account on the day you make them. You should regularly check your credit card transactions to see what is being applied and when. (This is also a good idea from the point of view of making sure there are no fraudulent transactions on your account). Checking your credit card transactions is usually possible via an app or by logging into your online account.

What can I get with the 118 118 Money Credit Card? 

If your application for a 118 118 Money Credit Card is successful, you'll know exactly what you get. A simple flat interest rate. A guaranteed credit limit and a representative APR of 34% (variable).

If you're thinking of applying for one of our cards, you could use our eligibility checker. This will let you know if you're likely to be approved, and this doesn't impact your credit rating.

We do charge fees for late or missed repayments as well as fees for cash withdrawals too, remember this if you're considering applying for one of our credit cards.

The fees are £12 for late or missed repayments and 5% cash withdrawal fees.

If I’ve got bad credit, can I get a credit card?

There are credit cards out there for people with ‘bad’ or ‘poor’ credit. If you’ve never had any credit before, have had financial difficulties or even been a victim of fraud, then you could be seen as having poor credit. A number of lenders may consider giving you a credit card for bad credit. 

Can credit cards help improve my credit score?

Credit cards can only help you build your credit score if you use them responsibly. Credit cards which are designed to help to build credit– you need to make your payments on time and should always aim to pay more than the minimum payment. If possible, also pay your balance in full each month.

What is the extra protection I get with a credit card?

Credit card purchases over £100 are protected at no cost to you thanks to the Consumer Credit Act 1974, Section 75 law. This means if there is an issue with good or services you buy, you could get your money back, provided that Section 75 applies to your credit card agreement and the purchase in question. According to the law, if you buy anything on your credit card costing between £100.01 and not more than £30,000, then both the seller of the item and your credit card provider may both be equally liable if something goes wrong with the purchase.

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Credit Card FAQs

A credit limit is the maximum amount you can borrow at any one time on your credit card. Your credit limit is usually stated at the time your credit card provider offers you a credit card. As long as you are making your repayments on time, staying within your credit limit, and working to clear your balance regularly; your credit card provider may offer you credit limit increases over time – but even if you take this, always try to spend within the means of what you are able to repay each month.

Your credit limit will really depend on a few things – how much you’d like your limit to be, and what you can afford to repay – your credit card provider won’t offer you a limit which would require a monthly repayment higher than what you may be able to afford to repay.

When calculating your affordability, credit card lenders will look at your income and expenditure to assess what is available after you’ve paid all your bills. They will then look at what other credit you have and the limits already available to you, as well as any loans or mortgages. Finally, how you have repaid other credit in the past will be taken into consideration before a credit limit is offered.

The very best way to use credit cards are to try and pay off your balance on time and in full, before you accrue interest. This isn’t always possible, but if you can pay off as much as you reasonably can on the amount you've borrowed, as regularly as you can, you will be on your way to using your credit card in the best possible way. Many customers also set up Direct Debits for payments, this way you are at least making the minimum payment. 

This is the process whereby you move the balance (debt) from one credit card to another. This is usually done when a customer wants to move the debt to a card which offers a lower interest rate or representative APR, or in some cases, the new card offers additional rewards - for example cashback on certain transactions or another incentive. To further entice the customer, many credit card providers may choose not to add any balance transfer fees. In some instances, they may offer a set period of time when no interest is charged on the balance. However, as with other cards, the provider will expect at least the minimum monthly payment to be made. 

Essentially, a credit card is a revolving line of credit whereby the cardholder can spend any amount within their agreed credit limit. When making repayments, with a credit card you can choose to either make the minimum monthly repayment, pay a fixed amount towards the balance, or clear the balance. If clearing the balance by your payment due date, then you won't incur any interest charges. 

A personal loan on the other hand is typically for a fixed term, whereby you would pay in monthly instalments to clear the balance you're borrowing (and any interest charged on that balance). 

Dependent on your own individual circumstances, each type of borrowing comes with different pros and cons.  

Want to apply for a credit card with 118 118 Money?

See if you’ll be accepted before you apply and find out what credit limit we will offer you without affecting your credit rating!

Check my eligibility
118118Money.com