#applying for credit cards
200,000 people are taking care of their money with our FREE money advice newsletter.
Send me money advice
Getting a credit card can be exciting, but you need to choose wisely and apply with care. Find out about choosing the right card for you, and how to make a successful application without damaging your credit score.
Choosing a credit card – what to look out for
Borrowing on a credit card can give you a bit of extra flexibility – but make sure you choose the right card and pay it back in full each month
Choosing a credit card can mean digesting a lot of information and numbers – it’s much easier if you know what to look for. Here are the key points and what they mean.
Look at the APR
The annual percentage rate (APR) tells you how much your card provider is charging you for credit. It includes the actual interest rate and any monthly or annual fees. The APR is based solely on the purchase element (ignoring any introductory rates), and doesn’t take into account the cost of balance transfers and cash withdrawals.
The way the APR is worked out is laid down in law and it’s the figure that providers have to use in advertisements. This is so that you can compare the different rates they are offering.
The APR is something that you can use to compare different credit cards. They vary a lot – one card might be 13% APR, while another might be 29%. The lower the APR the better, but you also need to look at how much it costs. This might be different depending on how you intend to use the card.
Watch out for ‘Representative APR’
What you see isn’t always what you get. Some card providers set your interest rate based on your credit history. They advertise the representative APR – one that most people (at least 51% or better) are offered. But if you have a poor credit history, you might be charged a higher rate.
Check the fees
Compare the charges for late payments, exceeding your credit limit and returned payments. See how to minimise the fees you pay in our guide to Managing your credit card account .
Weigh up introductory offers
Banks often tempt you with offers that last for a fixed period of time. The most common is to pay 0% interest on things you buy or balance transfers (debt you transfer from another card). The 0% offer is a cheap way of borrowing when you need to buy something big, but you have to time it right. Make sure you can pay off the card before your introductory period ends, or transfer to another card to get a brand new offer.
Check the terms and conditions on balance transfer offers
A balance transfer means moving your debt from one credit card to another. Banks often offer special introductory interest rates for balance transfers. But you might not realise that you have to pay a fee, usually around 3% of the balance. You will need to make minimum payments throughout. If you don’t, this may invalidate offer and lead to its withdrawal.
Do you really need the benefits?
Some cards come with benefits like free travel insurance, air miles, cashback or a concierge service (like a personal assistant over the phone – they do anything from booking hotels to ordering last-minute anniversary flowers). Think before you opt for any of these. Are they worth your while?
Check what you’ll pay each month
If you don’t plan to pay your balance back in full at the end of the month, use our Credit card calculator to work out how much interest you could end up paying based on different APRs and time periods. Remember the APR is based solely on purchases and you’ll usually pay different rates for different elements.
The figures can be scary. Unless you’re on a 0% deal or have more expensive debts elsewhere, you should always aim to pay off what you owe at the end of the month.
Research the best credit card for you on the Which? website .
Applying for a credit card
Ways to apply
There are three ways to apply for a credit card.
- Online – you fill in a form on the web. You may be sent some extra paperwork to sign and send back in the post.
- By post – you fill in a paper form, which you can usually get at the bank that’s offering the card.
- In-branch – someone in your bank can help you with the application. You’ll usually need to make an appointment.
The downside of applying – it may affect your credit rating
If you’re shopping around and comparing various credit offers, make sure you don’t actually apply for credit until you’ve decided on the best deal.
In some circumstances, a lender may be able to indicate the likely interest rate it can offer you without needing to undertake a credit application search. Although in many cases, the interest rate will be irrespective of your credit rating. If you ask if this facility is available, the lender will advise you that either:
- It is available, in which case the lender would register a ‘quotation’ search, which will not affect your credit rating, or
- It isn’t available, meaning that the lender will need to undertake an application search in order to be able to provide this indication.
Every time you make an application for a credit card or store card. it’s noted on your credit file. If you make too many or your applications are refused, it may suggest that you’re in financial difficulty, which can damage your credit score.
If the lender needs to make a credit reference agency (CRA) check, you can ask for this to be a ‘quotation search’ on the basis that you’re just shopping around and are not yet ready to apply. If they refuse, think carefully about whether you want to go ahead. There is no guarantee that they will lend to you at that rate. Other information may come to light when you apply, which could lead them to turn you down or offer a card at a higher APR
Improving your chances of getting a card
Take these steps to improve the chance of having your application accepted.
- Make sure you are on the electoral register at your current address.
- Cancel any cards you don’t use. These days, companies are interested in how much credit you have available, not just your credit record. If you have so many credit cards that you might get into thousands of pounds of debt, they’re unlikely to give you another one.
If your card application is refused
If the lender rejects you on the basis of a CRA check, it must tell you that and give you the contact details of the CRA they used. In any event, you can ask the lender why your credit application was declined. You can then request a copy of your credit file from the credit reference agency for a small fee. It shows:
- Your repayment history (whether you tend to pay off your cards on time)
- Any financial problems you have like County Court Judgements or defaults registered against you
- Electoral roll details
- Previous credit searches
If there’s something wrong on there, talk to the CRA and your bank to get it put right.
How to keep up a good credit score
The most important thing is to always get your repayments in on time – late or missed credit card, loan or mortgage repayments can seriously damage your credit score. The best way to avoid missing a payment is to pay by Direct Debit.
Other things that affect your credit score include:
- Your job – is it permanent and secure, and how long have you had it?
- Your home – do you own your own home, or have you lived at the same address for at least a year?
- Your phone number – it helps to put your landline rather than your mobile number on the application form
Credit builder cards
If you’ve been turned down for a card because you’ve got a poor credit rating, one way of rebuilding your credit history is to use a credit builder card. But you must always repay in full on time or it could end up making your credit rating worse.