Best Credit Cards in the UK

Written by Robert Ferry on March 28, 2022
Best Credit Cards in the UK

In the modern world, credit cards have become a necessity for almost everything, which is mainly why they are in demand. People have different responsibilities and liabilities that often motivate them to use credit cards. Since it is convenient to use one, people have set a different credit limit on their cards depending upon their needs. However, choosing the best credit card entails work as many companies offer their services to individuals seeking to own a card.

The purpose of a credit card is to borrow funds from the company for a brief time and make the payment wherever necessary. The companies charge these individuals with an amount, thus including interest payment. Hence, you get a loan with a credit card for a limited amount of time to be paid every month. Some creditors in the banking industry would include traditional banks, credit unions, etc.

Each credit card company offers unique packages to its customers that differentiate them from other companies. These packages would include the terms and conditions to pay back the amount borrowed, bi-weekly or even monthly. When the amount is returned, it is always more than what was borrowed due to the interest charged on the loan amount. That is why several financial experts advise people only to buy what is necessary. Moreover, it is recommended to keep a check and balance on the products and services paid with the credit card.

Nowadays, people carry less cash with them and often use credit cards to make payments be it for grocery, gas, utility bills, etc., since it is convenient for them. Since cash could be lost and there is no way of getting it back, credit cards carry an invaluable advantage. The advantage is that once lost; the card could be canceled to avoid theft or fraud, so even though there is a liability to some extent, it is less than keeping hard cash.

There are several types of credit cards in the banking industry, each with advantages and disadvantages. Credit cards have made the lives of people more straightforward and convenient. Almost everything can be paid for with the help of credit cards. But it is necessary to know which credit card should be used to pay for something. This information is necessary as it can save people a lot of funds. Since the purpose of each credit card is different from one another, they all should be used in places and on occasions for which they were created (discussed later).

The article will cover the basics of credit cards and how a person can apply for one. We will also highlight the various types of credit cards introduced in the industry. We will discuss the best credit cards that the UK offers.

What is a Credit Card?

Credit cards help people manage their financial situation by borrowing funds to pay the bills and other transactions for goods and services. Credit cards have a credit limit, and once that limit is maxed out, the individual is entitled to pay back the amount they borrowed either in installments or every month.

The person has a choice to either pay some or the entire amount they have borrowed. However, there is no set time when the dues can be paid off, but the banks encourage writing off the debt as soon as possible. Also, under the terms and conditions of credit cards, there is a minimum monthly deposit that the individual has to maintain and payback to avoid any late penalty fees. Some people choose to pay their full dues, while some pay a little more than the minimum monthly deposit.

The amount to be returned includes the principal payment that the individual spent by using the card, the interest rate levied on those payments and the interest-free period that a person enjoys when they are first issued a card. Under the interest-free period, no interest is charged on any payment until the period's expiration date. The interest-free period differs for each credit card company and one credit card to another. Usually, the interest-free period is of 55 days.

Credit cards are different from debit cards. In the case of credit cards, a person is borrowing a loan from an accredited credit card company that agrees to pay for the payments on behalf of the person. The person will pay back the amount under the payment plan they have agreed to when agreeing to the terms and conditions. Alternatively, a debit card can be used for transactions, but the amount used to make the payments is restricted to the person's wealth in their account.

Credit cards are powered by the following:

How to Apply for a Credit Card

The first step in this process is to carry out due diligence and compare the different credit cards in the industry. An effective way is to carry out a process of elimination and have the top credit cards that suit your needs.

The next step involves the use of an eligibility checker. You would need to put in relevant details like your credit score, income, etc., providing you with a final result. The result would show whether you qualify for such a card or not.

A person needs to be at least 18 years old or more to apply and then own a credit card, but that person's financial condition is equally important. A strong financial condition means that their credit score is high. Hence, if that person's financial situation is strong and can manage his finances perfectly, he may be allowed to own a credit card. Some individuals whose age is 18 years or more but have poor credit ratings may still be allowed to qualify for a credit card but with a restricted limit and short interest-free period.

We will now look at a person's application process for a credit card. The steps include the following:

  • It is essential to know the information you will need to provide to apply for a card. That generally includes your name, contact details, date of birth, current and permanent address, utility bills, and annual income.
  • Go to the website of the credit card company and apply for the credit card that you wish to have. The process will take not more than 5 minutes.
  • The waiting time could be as short as a few minutes but could also be as long as a few days or weeks. During this time, the company evaluates your finances and sees if you qualify for it or not.
  • You will receive a confirmation about the decision by email. Your card will arrive at you by post within five to ten business days if you have been approved.
  • Once your card is with you, you may need to call customer service to make it operational. They will guide you on how to make it operational. Some credit card companies provide portals where individuals can register their cards online.

Let us look at all the different credit cards that the banking industry provides to customers.

Types of Credit Cards in the UK

There are several credit card offers to roam around in the UK, but it could be challenging to understand the one that suits you the most. The credit card industry is very versatile in its deals in the UK, ensuring healthy competition among the different credit card companies. Hence, it is vital to research to know more about the UK's credit card perks.

The following list will show the different credit card types that people in the UK can enjoy.

Airmiles Credit Cards

Airmiles credit cards enable a person to earn air miles on every purchase they make using the card. These air miles could be used for both domestic and international flights. The air miles credit cards are further segregated into two options which include "airline-specific credit cards" and "generic air miles credit cards" (discussed below).

Airline-Specific Credit Cards

These cards are linked with particular airlines that consider the air miles cards and let you earn air miles on them. A person does not need to necessarily buy tickets to earn the points because those points can be earned by making every purchase using the card. Many people save their air mile points and use them to pay for rentals, including cards, hiring a tour guide, etc.

Air miles can also be used to make flight upgrades by moving from economy to business or first class. Moreover, a person can also gift their air miles to another person, a family, or a friend. Air miles can further be used to pay for the flight for another person free of cost by utilizing the points.

Generic Airmiles Cards

With these cards, a person can earn points on everyday purchases. Those points can be accumulated and redeemed at any airline or travel agency for any travel-related perks of your choice. Using these cards does not limit a person to a particular airline, as they can use any airline to enjoy the benefits. All airlines have different prices and availability, so a person can choose any airline to utilize the points that suit their needs and preference for the journey.

All airlines have air miles cards that are different from other airlines. They are different in terms of perks they offer, the amount you need to spend to earn specific air miles, etc. It is wise to compare different air-mile cards to know more about them. For example, know how many points you should have for one airline to earn a free flight. Different airlines have different ranges in terms of points, so one airline might ask for 15000 air miles to Europe, whereas the other might ask for 12000 air miles.

Several airlines offer introductory awards linked to the card, such as 3x air mile points on every pound spent using it. Although such offers are quite tempting, a person should always cater to their financial situation and if they have the means to pay for it. It is crucial to check if the air mile points have an expiration date. If they do, it is beneficial to utilize them before they expire.

Credit Cards for Bad Credit

If the credit rating is less than average, a person will not be offered a credit card with favorable terms. This is because credit card companies are unsure that the person will be able to pay back the dues. More often, it is seen that people default on payments, and credit card issuers have to face the loss. However, certain credit cards are built to help people with bad credit scores.

On behalf of credit card issuers, people with bad credit are considered risky investments. But still, several card issuers approve those people worthy of owning a credit card. Such credit cards often come with high-interest rates and limited credit limits. These measures are implemented to ensure the individuals pay back the money borrowed. If individuals continue to make timely deposits, their credit score will improve as the issuers report to major credit bureaus to help such people.

On-time payments would also build trust between the borrower and the issuer. As a result, the issuer might extend the card's limit and show some favorable terms like APR. Once this is done, cardholders can also apply for other credit cards with greater perks like benefits and rewards.

Credit Building Credit Cards

These cards are for people who have some credit history and are currently looking to improve their credit score. These cards come with a much better APR rate than credit cards for bad credit. Moreover, these cards offer relatively better benefits like charging their customers 0% on all items purchased and 0% on any money transfers incurred. Credit building credit cards offer cash backs on all transactions through the credit card.

The critical thing to consider with this card is to make sure all the payments, dues, and debt is returned in time to ensure no late fee is added to the payments. With these cards, the purpose is to improve the credit score, and that can only happen if the dues are paid promptly. If that is done, the person will have the credit improved to apply for better mainstream cards.

Balance Transfer Credit Cards

These cards serve the purpose of transferring the existing balance from a high interest carrying credit card onto a different card that has less or zero interest. In this way, a person can save valuable funds from interest payments. But these chards charge a balance transfer fee to transfer the funds from one card to another. Several free balance transfer credit cards have limited interest-free days than standard balance transfer credit cards.

Balance transfer credit cards have a limited time window to make the balance transfer happen. All funds transferred within the window duration will incur no balance transfer fee or comparatively less balance transfer fee. This stands opposed to any payment transferred after the set duration concludes.

People familiar with balance transfer credit cards know that they can be effectively used to pay off a debt or loan. But several financial experts advise having a proper repayment plan to return all dues promptly. The plan ensures that no fee in interest is added within the introductory period. If such a plan is not followed, a person would have to pay a high APR and the principal payment.

Business Credit Cards

Business credit cards are primarily for business people, including business owners of all kinds, such as sole traders and CEOs of a large business with several employees working underneath them. These cards look similar to traditional credit cards, but their operation is entirely different. These cards can help any business owner distinguish the expenses. Hence, all the personal expenses will be segregated from the expense incurred doing business.

Business credit cards have several perks, so they are in demand. For instance, they help a business owner manage its cash flows. These cards have an interest-free period between spending on the card and when repayments have to be made to the credit card company. These cards also come with a cashback offer on all purchases made. The card can also be used for travel purposes, and thus a person can earn travel points that could be redeemed.

Business credit cards and the business and credit score can be used to apply for additional business credit cards for employees assigning a specific limit and budget. These cards would then give a monopoly to the employers to travel and make business-related purchases like lunch or dinner with clients. In this way, an employer can maintain control over the business end spending the employees carry out and ensure nothing is purchased that is not relevant to the business.

Cash Back Credit Cards

Under cash back credit cards, a person can earn some percentage on credit they spent like making purchases called "cash backs." Every card issuer offers different cashback rates on each credit card. This cashback also must be maintained to ensure that cashback can be granted. For example, spending 1000 pounds in the first three months will earn 1% cashback on all purchases.

Certain cash back cards come with an annual fee, so it is crucial to weigh the costs against the benefits and take full advantage of cashback wherever relevant. Weighing the cost against the benefits will help you understand whether the cash backs are worth the spend that a person would need to incur. 

Cashback credit cards come with a relatively higher APR than any other rewards credit card, so a person should go for it if they can pay their dues on time. In the case the balance in any given month is not paid back in full, the annual fee, late payment fee, and APR will consume the cashback a person would receive on the purchases for the entire year.

Other Types of Credit Cards in the UK

The UK has some other types of credit cards that are often used by the clients of different credit card companies. They include the following:

  • Low Interest-Rate Credit Cards
  • Rewards Credit Cards
  • Travel Credit Cards
  • Interest-Free Credit Cards

Each of these cards is meant for some unique purpose. And as their names suggest, their purpose is evident for which they are meant to be used. To enjoy the most out of such cards, their purpose should not be changed; otherwise, high APR would cause the due amount to increase.

We will now discuss the best credit cards in the UK.

Best Credit Cards in the UK

This section will cover the UK's best credit cards in different categories. Each category will cover several credit card issuers to display their key features. They include:

Top Travel Credit Cards

Travel credit cards are used whenever a person decides to go on a holiday or vacation, which can be domestic or foreign. All expenses incurred on that trip, including flights cost, accommodation, food, and other kinds of necessary purchases, are covered by this card.

There are specific fees linked to using a credit card for transactions. They consist of

  • Non-sterling transaction fee: A fixed fee of 2.99% is charged each time a transaction is done using the card. So the value of each transaction will incur a 2.99% non-sterling transaction fee.
  • Non-sterling cash fee: When the credit card is used to withdraw funds from the ATM, a fixed fee of 3%, which equates to 3 pounds, is charged.
  • Interest on cash withdrawals: Interest is charged on every cash withdrawal, as high as 29.9% of the amount withdrawn.

Check below the top travel credit cards.

Halifax Clarity Credit Card

Halifax Clarity Credit Card has the following key features:

  • Non-sterling transaction fee: None
  • Non-sterling cash withdrawal fee: None
  • Purchase rate: 19.93%
  • Representative variable rate: 19.9%
  • Overseas transaction fee: 30,000 pounds

Barclaycard Rewards Credit Card

Barclaycard Rewards Credit Card has the following key features:

  • Non-sterling transaction fee: None
  • Non-sterling cash withdrawal fee: None
  • Purchase rate: 22.9%
  • Representative variable rate: 22.9%
  • Credit limit: 1200 pounds
  • Cashback: 0.25% on everyday purchases

118 118 Money Guaranteed Rate Card

118 118 Money Guaranteed Rate Card has the following key features:

  • Non-sterling transaction fee: None
  • Non-sterling cash withdrawal fee: None
  • Purchase rate: 34%
  • Representative variable rate: 34%
  • Credit limit: 500 pounds
  • Hidden charges: None

Best Credit Cards for Bad Credit

People who have poor or below-average credit scores deserve to own credit cards. That is why credit cards for bad credit have one purpose: to improve the individual's credit. These cards are a ladder for individuals to better their creditworthiness to apply for mainstream cards.

These cards come with a lower credit limit relative to other cards. Moreover, these cards have a high APR rate on every card transaction. These cards also offer a few perks to individuals.

Check below the top credit cards for bad credit.

Tesco Bank Foundation Credit Card 

Tesco Bank Foundation Credit Card has the following key features:

  • Credit limit: Minimum 250 pounds to maximum 1500 is required (varies)
  • Annual fee: None
  • Purchase rate: 27.5%
  • Representative variable rate: 27.5%
  • APR (varies)

Vanquis Bank Chrome Credit Card 

Vanquis Bank Chrome Credit Card has the following key features:

  • Credit limit: Minimum 250 pounds to maximum 1500 is required (varies)
  • Annual fee: None
  • Purchase rate: 29.5%
  • Representative variable rate: 29.5%
  • The credit limit can be extended to 4000 pounds

Capital One Classic Platinum

Capital One Classic Platinum has the following key features:

  • Credit limit: Up to 1500 pounds
  • Annual fee: None
  • Purchase rate: 26.99%
  • Representative variable rate: 26.99%
  • Transfer fee: 3%
  • Cash advance fee: Between $10 and 3%, whichever is more
  • Late payment fee: up to $40

NewDay Amazon Classic Credit Card

NewDay Amazon Classic Credit Card has the following key features:

  • Credit limit: Up to 1200 pounds
  • Annual fee: None
  • Purchase rate: 29.5%
  • Representative variable rate: 29.9%
  • APR: 0% in first three months

Best Interest-Free Credit Cards

The interest-free credit cards carry zero interest across all the payments made through the credit card. The period is for a limited time only, and once that period is over, interest will be applicable on any transaction made using the card. The interest-free period will vary from one credit card to another.

These cards are suitable for people who have the financial capabilities to pay off their debt and dues before the introductory period comes to an end. A thing to note here is that people should keep in their mind the things they buy because they would have to pay them back to the credit card issuer. So if they buy too many products and services and are unable to pay for them, it will leave them in a financially tight spot with a high APR rate.

Check below the top interest-free credit cards.

Barclaycard Platinum Purchase All-Rounder Credit Card

Barclaycard Platinum Purchase All-Rounder Credit Card has the following key features:

  • 0% purchase term: Up to 22 to 24 months
  • Purchase rate APR: 21.9%
  • Representative variable rate: 21.9%
  • Credit limit: 1200 pounds
  • Transfer fee: 2.9%

Tesco Bank Clubcard Purchases Credit Card Purchases

Tesco Bank Clubcard Purchases Credit Card Purchases has the following key features:

  • 0% purchase term: Up to 23 months
  • Purchase rate APR: 20.94%
  • Representative variable rate: 20.9%
  • Credit limit: 1200 pounds
  • 0% interest period: 23, 18 or 14 months

Sainsbury's Bank Dual 23-Month Offer

Sainsbury's Bank Dual 23-Month Offer has the following key features:

  • 0% purchase term: Up to 24 months
  • Purchase rate APR: 21.95%
  • Representative variable rate: 21.9%
  • Credit limit: 1200 pounds
  • Balance transfer fee: 3%
  • Annual fee: None

M&S Bank Shopping Plus Offer Card

M&S Bank Shopping Plus Offer Card has the following key features:

  • 0% purchase term: Up to 23 months
  • Purchase rate APR: 21.9%
  • Representative variable rate: 21.9%
  • Credit limit: 1200 pounds
  • Balance transfer fee: 2.9%
  • Interest-free days: 55 days

HSBC Purchase Plus Credit Card Visa

HSBC Purchase Plus Credit Card Visa has the following key features:

  • 0% purchase term: Up to 22 months
  • Purchase rate APR: 22.9%
  • Representative variable rate: 22.9%
  • Credit limit: 1200 pounds
  • Annual fee: None
  • Balance transfer fee: 2.9%

Best 0% Balance Transfer Credit Cards

If a person has a large amount of debt that they wish to write off, a 0% balance transfer credit card could help you resolve that issue. A person can transfer the balance of an existing card to another card of another credit card issuer by paying a balance transfer fee. Credit card issuers allow the person to make the transfer as long as they have a sufficient credit limit to cover it.

Using a 0% balance transfer credit card, a person can shift their dues from an expensive credit card to another one with less interest. They would then store the cards and freeze the interest for a specific period. This gives some breathing space, and the individual can save funds and pay back the debt during that set duration.

Check below the top 0% balance transfer credit cards.

MBNA Limited Long 0% Balance Transfer Credit Card

MBNA Limited Long 0% Balance Transfer Credit Card has the following key features:

  • 0% balance transfer period: Up to 33 months
  • Balance transfer fee: 2.69%
  • Credit limit: 1200 pounds
  • Purchase rate APR: 21.9%
  • Representative variable rate: 21.9%

Virgin Money Balance Transfer Credit Card

Virgin Money Balance Transfer Credit Card has the following key features:

  • 0% balance transfer period: Up to 32 months
  • Balance transfer fee: 2.94%
  • Credit limit: 1200 pounds
  • Purchase rate APR: 21.9%
  • Representative variable rate: 21.9%

Sainsbury's Bank Balance Transfer Credit Card

Sainsbury's Bank Balance Transfer Credit Card has the following key features:

  • 0% balance transfer period: Up to 32 months
  • Balance transfer fee: 2.24%
  • Credit limit: 1200 pounds
  • Purchase rate APR: 21.95%
  • Representative variable rate: 21.9%
  • Annual fee: None

Best Cash-Back Credit Cards

Cashback credit cards help you earn cash packs every time you use the card to make a transaction. In this way, you will be able to earn, which will help you save funds to pay debt payments. Cashback can be as low as 0.1% to 5%. Each credit card issuer has a different set of offers for cash backs, such as some offers are on everyday purchases while some are specific like grocery, gas, etc.

Check below the top cash backs credit cards.

Santander All in One Credit Card

Santander All in One Credit Card has the following key features:

  • Earn 0.5% cashback on all the spending
  • Spending 500 pounds each month for a  year will get you a cashback of 30 pounds
  • Annual fee: 36 pounds
  • Credit limit: 1200 pounds
  • Purchase rate APR: 17.9%
  • Representative variable rate: 23.7%

American Express Platinum Cashback Everyday Credit Card 

American Express Platinum Cashback Everyday Credit Card has the following key features:

  • Annual fee: None
  • Credit limit: 1200 pounds
  • Purchase rate APR: 24.7%
  • Representative variable rate: 24.7%
  • Spending 500 pounds each month for a  year will get you a cashback of 97.50 pounds
  • Minimum annual spending is 3000 pounds to ensure the cashback option is valid
  • All purchases under 100 pounds are subjected to 5% cashback for the first three months only

American Express Platinum Cashback Credit Card

American Express Platinum Cashback Credit Card has the following key features:

  • Annual fee: 25 pounds
  • Spending 500 pounds each month for a  year will get you a cashback of 108.75 pounds
  • All purchases under 125 pounds are subjected to 5% cashback for the first three months only
  • Credit limit: 1200 pounds
  • Purchase rate APR: 24.7%
  • Representative variable rate: 30.7%

Conclusion

The article covers the credit cards used in the UK in great detail. All the credit cards are covered under a category to help you understand their primary use worldwide. To determine the best credit card for you, it is essential to weigh all your options against one another. But it is essential to carry out due diligence and do your home regarding the different credit cards available in the banking industry.

Each credit card issuer comes with several credit cards, so it is essential to know your preference and need. For instance, people who wish to travel abroad would be better off with a travel credit card. So, according to experts, a person should look at the options of different travel cards and weigh the perks against the drawbacks. Similarly, if you are looking for a rewards credit card, check for cash backs credit cards. Several cashback credit cards mentioned in the article are worth your time.

Whatever your preference is, it is better to know the types of credit cards in the banking industry. In this article, you will come across several credit cards that are explained in detail and will help you understand the use of each of them and where they are most effective. Some people mistake buying one credit card and using it for all the expenses they incur, which is wrong and would also cost them in terms of funds.

Financial experts advise the customers to thoroughly read the terms and conditions of the credit card when they get approval because they are vital. They are vital because you will get to know what perks you can enjoy and the liabilities you need to cover, such as paying dues on time, annual fee deposit, and ensuring there is no late payment.

Article written by Robert Ferry

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