Your guide to credit cards

A credit card is a way of borrowing money that lets you buy things up to an agreed limit and pay for them later, either in one go or in chunks.

Things to remember

If you don’t pay your balance every month, you’ll be charged interest and your credit card will quickly become an expensive way to borrow money. So, unless you have a special introductory offer from your bank, make sure you can at least afford the monthly minimum payments. 

Failure to make minimum payments, and missing a payment altogether, will likely result in charges and will affect your credit score.

The representative example is a handy wee tool that banks use to help you compare the cost of borrowing in one standard format. It shows you a few important bits and pieces, which we’ll run through in here to keep you right.

There are three elements to a representative example:

• Purchase rate: This is the interest rate that will be attached to most goods and services purchases that you make with your card. If you pay off your full balance every month, you won’t pay interest on these purchases
• Representative APR: This is the annual purchase rate, and it is used to show the full cost of your borrowing
• Assumed credit limit: All banks need to quote this amount so you can compare cards. It’s a guide limit, and we use £1200, although it’s unlikely that this is the exact limit we’ll offer when you apply
   

Things to remember

Applications are assessed on an individual basis. The rate and terms you’re offered will not always match up with the rate you see before you apply. 

A balance transfer is when you move a credit card balance from one credit card provider to another, often with a lower (or 0%) rate of interest for a set period of months.

This type of offer could help reduce your monthly credit card payments and/or clear your debt quicker, but it’s important to note that there may be a fee to transfer a balance and you should consider the costs you will pay when any introductory offer expires.

If you currently hold a balance on a credit card and want to get an indication of how long it will take you to repay the balance, use our credit card repayment calculator.

Your credit score isn’t just used for accessing financial products. Providers may check your credit score when you apply for a mobile phone contract, a mortgage or insurance.

They access a credit file that gives them information about the payments you make to any loans, credit cards and mortgages each month. And they can also see the way you run your bank accounts.

There are a number of ways your credit score could be harmed.

• Applying for credit too often
• Having lots of debt
• Missing any debt repayments

Remember, if your credit card provider gives you a limit that’s more than you need, you can ask them to lower it. This is a good way to avoid the temptation to spend.

Things to remember

Banks will use your credit score to decide whether to lend you money. They may also use it to decide how much to lend to you and what interest rate to charge you. It's important to be aware of your score, so check yours through agencies such as Experian.

A credit limit is assessed on a customer-by-customer basis and is the maximum amount you can spend on a credit card. We’ll take a look at your income, debt level and credit history so we can be sure your credit card has a responsible spending limit.

We know there are lots of different credit cards out there, which means it can be quite tough to find the right one for you. Let's start by having a wee look at the most common types of credit cards.

Incentive based credit cards

Some credit cards will reward you in return for spending money on the card. You could be offered points, cashback, vouchers or even air miles by the provider. These cards can be really helpful if you are someone who likes to repay your balance in full each month. Remember to consider interest costs as well as any incentives the card provider offers.

Travel benefit credit cards

Some credit cards offer travel benefits like no foreign transaction fees or insurances. This could be a nice wee saver if you are someone who likes to go on holiday every so often. 

Low rate credit cards

Low rate credit cards are designed to help you save money on interest when buying things on your credit card. 

Student credit cards

These credit cards are there to help students through their studies by giving them a useful safety net for any unplanned expenses. This type of card will tend to have a lower credit limit.

See our range of credit cards to find out more about the cards we offer. 

Things to remember

Over 18s only. Eligibility criteria applies.