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Why you might need a credit card

Before we cover how you can get a credit card, it’s worthwhile thinking about the reasons you might want one.

When it comes to getting your first credit card, keep in mind that while it gives you flexibility, it’s also a big responsibility.

Credit cards can be a useful tool to help you manage your money and there can be benefits to using credit cards for spending and borrowing in the short term. However, it’s important to know how to use a credit card to avoid being stung by high charges.

What are the advantages and disadvantages of credit cards?

There are several benefits that a credit card can bring, as long as you only spend what you can ultimately afford to pay back. These include:

• Spreading the cost of items over time

• Building a credit history or improving your credit score

• Earning rewards or perks such as cashback or air miles

• Purchase protection on items if the seller goes bankrupt 

However, there are several disadvantages to credit cards to keep in mind:

• It can be easier to spend more than you can afford

• Missed payments will damage your credit score

• Managing multiple credit cards can become difficult

• Utilising too much available credit can concern lenders

How does a credit card work?

‘Credit’ is money you borrow, whether it’s through a credit card, loan or overdraft.

When you apply for a credit card, the lender runs a credit check on you to see how risky they think you are as a borrower.

If they approve you for a credit card, they’ll give you a credit limit. Your credit limit is a set amount of money you can access to pay for goods or services.

You pay back the money you borrow back each month, either in part or in full, with interest added if you have an ongoing balance. There’s a minimum amount you’ll have to pay, but it’s best to pay off the whole balance because then you don’t pay interest.

Do I need a credit card to build a credit score?

If it’s your first credit card or the first time you’ve ever borrowed money, you’re unlikely to have a credit record yet.

That means banks and lenders will see you as a high-risk borrower. That’s because there’s no evidence showing what kind of borrower you are. This might limit the number of credit cards you’re offered, and the amount of credit you can get.

You’ll need to use your first credit card sensibly and regularly to build up your credit rating.

A better credit rating will come in handy when you need to borrow more money in the future, for something bigger like a mortgage or car.

But even if you are a first-time borrower with no credit rating, there are still options available to you. By learning about how to get a credit card, UK borrowers will find the application process simple and stress-free.

How to get a credit card for the first time

The tips and information below will be helpful if you’re thinking of getting your first credit card. Find out how to get a credit card and what to look for when choosing one.

Who can apply for a credit card?

You’ll need to be at least 18 years old to apply for a credit card. But double-check because some cards do have a higher minimum age.

Most providers will only let you apply for their credit cards if you:

• Live in the UK

• Are employed

• Earn more than a certain amount, such as £7,500 a year.

But there’s another important step borrowers should know about. To make sure you get accepted for your first credit card, UK borrowers can start laying the groundwork well in advance.

The key is to make sure you're in the best possible financial shape before you apply. This will maximise your chance of being accepted for the first credit card you choose.

How to improve your chance of being accepted

There are a few simple steps you can take to increase your chances of being accepted for a credit card. These should be the first steps you take before you look further into how to get a credit card.

These include:

• Registering to vote: Getting on the electoral roll provides proof of address, which can boost your credit score

• Getting a job: Even if you get a part-time job, a regular income will show lenders that you're able to repay credit. If you’re not working, you might struggle to get credit.

• Opening a bank account: Managing a current account can help you improve your chances of being accepted. By setting up direct debits and putting away savings, you’re showing lenders that you're financially responsible.

• Pay bills on time: If you can show you’ve been repaying bills on time for at least six months, lenders will see this as proof of financial responsibility. It might help convince them that you can be trusted to pay back the credit.

A guide to choosing your first credit card

There are several different credit card types. Each is best suited to a particular kind of borrowing and choosing the right credit card to suit your needs is important.

You might be looking for one with low interest to help you pay off current debts. Or perhaps you want one with rewards that suit your lifestyle.

If you’re a first-time borrower looking for advice on how to get a credit card, then a credit builder card might be a good option for you.

Credit builder cards

If this is going to be your first credit card, you’re most likely to be approved for a credit builder card.

These make a great first credit card, UK wide. They’re also good for people with poor credit who are looking to improve their credit rating.

Credit builder cards typically have lower credit limits, generally between £50 and £3,000. They also charge higher-than-usual interest rates, ranging from around 30% to 50%.

As you consistently spend and repay your credit card, you'll create a record of a responsible borrower. Once you have a long enough credit history you may be able to get another type of credit card.

How to get a credit card that isn’t a credit builder card

A credit builder card is a stepping stone to getting one of these other types of cards. Although you might not be able to get any of these for your very first credit card, you might be able to once you’ve had a credit builder card for a while.

First focus on how to get a credit card, then work on managing it responsibly. Once you’ve done that, you should be able to progress to one of these types of cards:

• 0% on purchases: This means you won't pay interest on what you spend on your card for a fixed period.

• 0% on balance transfers: If you had another credit card with a balance charging you an APR, you could switch it to a 0% deal to cut out interest.

• 0% on money transfers: This lets you transfer most of the card balance to your current account. There’s usually a transfer charge for this.

• Air miles: This type of card gives you air miles for spending a certain amount on your credit card.

• Rewards: You can find rewards like cashback, giving you a percentage back on what you spend. For example, this could be 0.5%.

What to think about when applying for your first credit card

When you compare credit cards, it's important to consider a few key points. This will help you to work out which is the right card for you, and which offers the best value.

Interest

The interest charged on your credit card is the cost of borrowing money from the lender. When comparing credit cards, look out for the 'Representative APR'.

This is the rate or lower offered to at least 51% of customers who are offered that card. It’s not necessarily the rate you’ll be offered, as it’s based on your financial circumstances and credit history. So, you could be offered a higher rate than the one advertised.

Introductory APR

Some cards often come with lower, or even 0% introductory interest rates that last for a number of months.

After that, they revert to the standard rate. While these can be useful for spreading the cost of purchases, make sure you pay off your balance before the introductory rate ends.

Credit limit

This is the maximum amount you’ll be able to borrow on your credit card. Like the APR, your credit limit also depends on your credit history and finances.

As a first-time borrower, you may not be offered a high limit. But remember, if you always pay off your balance on time, the lender may offer to increase your limit. If they don’t offer, you can ask for it to be increased.

Fees

It's also important to be aware of any extra fees you could be charged. These could be late payment fees, foreign transaction fees, or cash withdrawal fees.

Managing your first credit card

Before you start using your first credit card, keep in mind that you should aim to clear the full credit card balance each month.

That way, you can avoid paying any interest and still be able to take advantage of the card’s benefits, including building your credit score.

Where possible, aim to set up a direct debit payment to clear the full balance each month. This will avoid the need to manually pay off the credit card balance and reduce the risk of missing any payments.

How to apply for your first credit card

You can apply for the credit card you’ve chosen online, by phone, by post or in person, depending on the provider. Before you apply for a credit card, you can use an eligibility checker to see your chances of acceptance for the card.

The simplest, quickest way is to apply online. You just have to complete an application form on the provider's website. You might be approved within minutes that way.

Most credit card providers ask you to share the following information:

•  Name and address

• Date of birth

• Employment status and income

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If your application gets declined

If you want to apply for the same card again, you should wait at least six months or you’re likely to be rejected.

Here’s how to get accepted next time you apply. Build your credit history, time your application well and clean up your finances, and you’ll be a more attractive borrower.

You can ask the lender why they declined your application, but they don’t have to tell you.

Alternatives to credit cards

If your application is declined or you decide against getting a credit card, there are alternative options to consider, including:

• Using a debit card

• Getting a prepaid debit card

• Utilising your overdraft facility (be aware of the charges that may apply)

• Applying for a short-term loan