Should I get a credit card? Do I need one?

At a glance

• A credit card can be a great tool for financial management, provided it’s used wisely.
• You should only get a credit card if you’re confident you can keep up with the repayments.
• Failing to manage it effectively can have a negative impact on your credit rating.

Credit cards can be a great way to manage your finances, and if used wisely they can be a valuable addition to your credit mix. They may even help to improve your credit score, though as with any form of credit, they won’t be right for everyone. So, should you get a credit card? Let’s find out.

Why should I get a credit card?

Credit cards can be useful for a variety of different reasons. They can provide a lifeline in an emergency if you don’t have the available cash upfront, and can be a great way to budget effectively. Here are a few reasons you may want to consider taking out a credit card:

Build up a credit history

If you’ve never used credit before you won’t have a credit history, which although in some ways may appear sensible, can actually be detrimental if you need to seek finance in the future (such as if you want to apply for a mortgage).

It’s far better to have built up a positive credit history that shows providers you’re a responsible borrower who can effectively manage your credit commitments, which can have a positive impact on your credit score. You may want to seek a specialist credit builder card for this purpose.

Spread the cost of purchases

Rather than needing to rely on the money available in your current account, credit cards allow you to spread the cost of purchases, essentially working on a “buy now pay later” format – and crucially, if you opt for a 0% purchase credit card, you needn’t worry about paying interest for a specified period, so it won’t actually cost you anything extra.

Earn cashback and rewards on your spending

Some cards allow you to earn cashback or rewards for simply spending as you normally would, and others can offer discounts at certain retailers. The key here is to pay off the balance before interest charges apply in order to get the full benefit, otherwise any cashback or rewards could be negated by the interest.

Consolidate additional debt

If you’ve got high balances on several credit cards and/or you’re being charged a high rate of interest, you can use a different credit card to consolidate that debt. A 0% balance transfer card allows you to transfer balances from other credit cards and benefit from an introductory interest-free period, giving you time to repay the debt before interest kicks in.

Minimise charges when travelling abroad

Travel credit cards have been specifically designed for those who travel regularly, offering low (or no) foreign usage charges that can minimise additional costs. Bear in mind though that some debit cards also offer fee-free spending abroad, so make sure to check with your current account provider.

Get extra protection on your purchases

By spending on a credit card rather than a debit card, you’re protected under Section 75 of the Consumer Credit Act if you have a dispute with the seller.

Risks of getting a credit card

Credit cards may not be the best option for everyone. They come with a lot of risks, including:

• There’s a risk of building up debt as they can tempt you into overspending. If having that available credit would be too much of a temptation, it could be wise to think again.
• They can be expensive. If you’re not in an interest-free period and can’t pay more than the minimum amount, the interest charged can quickly rack up and could make it unmanageable. There are penalty fees to consider too (such as if you miss a payment), which can make it even more expensive.
• They could harm your credit score. While they can have a positive impact on your credit score if you manage your card effectively, if you don’t – such as if you miss payments – it can seriously harm your score.

Ultimately you shouldn’t be tempted to get a credit card if you’re already struggling financially, as doing so has the potential to make things far worse.

You need to be confident that you can afford to make any repayments – ideally paying off the full balance each month, or making at least the minimum payment – and if your credit score isn’t up to scratch, it’s wise to work on improving it before you start thinking about applying for credit.

If you’re struggling with debt or existing bills, seek help from your provider or a debt charity rather than turning to credit. Citizens Advice could be a great starting point.

How much could your credit card cost you?

You can use our minimum repayment calculator to work out how long it would take to clear your balance if you only made the minimum repayment each month – and how much it would cost you in interest – as well as how much quicker you could repay it if you added a fixed monthly amount to your repayment schedule.

When should I get a credit card?

You can typically get a credit card in the UK if you’re aged 18 or above, but there’s no set age as to when you should get a card – and no requirement to have one at all!

You should only consider getting one if you can afford it, and you’re confident you can effectively manage it and won’t be tempted to overspend. You’ll need to meet the criteria of the card provider too – some may have minimum income requirements, for example – and you’ll need to have a good enough credit score to be eligible.

Indeed, your credit score is arguably the single most important factor in whether or not a lender will approve your application, so it’s important to check your credit score before you start applying so you know where you stand. A low score means you’ll be viewed as a credit risk and as such are unlikely to be accepted (unless you’re opting for a credit repair card), whereas a high score means you’ll have access to the best rates, terms and interest-free deals.

You’ll want to check your eligibility before you apply, too – most card providers have eligibility checkers on their websites that perform a “soft search” on your credit file, which means it won’t show up on your credit report if you’re declined. This isn’t the case with a full application, which will involve a full search and a black mark on your report if you’re rejected.

What credit cards do you qualify for?

See what credit cards you may be eligible for with our preferred credit card broker Monevo. This won’t affect your credit score.

Should I get a second credit card?

This will depend on your personal circumstances and eligibility. Technically, you can have as many credit cards as you like, but the number you’ll actually be approved for will depend a lot on your other credit commitments.

Yet even if you’re eligible, it’s important to think carefully about whether you should take on another card – particularly if your finances aren’t in the best shape – and you should only ever use credit if you’re confident you can pay it off effectively.

That said, having more than one credit card can be useful, particularly if you’ve got different cards for different purposes. For example:

• If you’ve got a big purchase coming up, you may want to spread the cost with a 0% purchase card.
• If you travel regularly, you could keep a travel credit card specifically for that purpose.
• You may simply want to use a cashback card for everyday spending, provided you’re in a position to pay it off each month.

If you’re going to have more than one credit card the key is to make sure that each one has a purpose, and that you use them responsibly – which means making at least the minimum payment each month, and ideally paying the full balance, particularly if you’ve got a cashback card.

Note that you shouldn’t apply for multiple credit cards in a short space of time; if you’re declined for a new one, it’s best to wait until your credit score has improved and try again.

Can I get a credit card to build credit?

Yes you can, and in fact, having a credit card that you use responsibility can be a great way to build your credit profile and boost your chances of being accepted for credit in the future.

However, bear in mind that if you’ve only got a poor (or no) credit history, you’ll likely only be accepted for specialist credit builder cards, which can come with much higher rates and lower credit limits.

The key is to only use them to make small purchases that you pay off each month, thereby avoiding interest charges being applied while showing to the lender that you’re a responsible borrower.

Should I get a credit card, loan or overdraft?

This will depend on what you’ll need the credit for, and how you’re planning on paying it back. Overdrafts are typically used as a back-up option in situations where you have unexpected payments coming out of your current account, but because interest rates can be high – often higher than with credit cards – you’d be wise to pay the amount back quickly.

Personal loans, meanwhile, are often preferred for larger purchases as they typically have lower rates than credit cards and have set monthly repayments. This means you’ll know exactly how much it will cost you in interest, and crucially, the amount will be fully repaid by the end of the loan term. The downside is that there isn’t any flexibility, and once arranged you’re locked in until the end of the term.

The advantage of a credit cards is that they’re a lot more flexible, and if you’ve got a 0% deal you could avoid paying interest altogether. However, there’s also the possibility that you could end up paying more for your purchases if you only make the minimum payment each month. How much it could cost will all depend on your balance and the interest rate you’re being charged (the APR), but you can use our credit card repayment calculator to help work it out.