5 Things to Consider Before Using a Credit Card
Published 7th of January 2013·Updated 20 April 2026
Reviewed by: Reviewed for accuracy April 2026
A credit card can be a useful financial tool or a source of serious debt, depending entirely on how you use it. Before you apply or start spending on one, there are five things you need to understand: the interest rate, whether you can genuinely afford the repayments, how it affects your credit rating, what the alternatives are, and what Section 75 protection gives you.
Short Summary
Credit cards are only cost-free if you repay the full balance every month before the due date. Carrying any balance from one month to the next means paying interest, typically at 20-30 per cent APR on standard cards.
Missing a payment harms your credit score and triggers a late payment fee. Setting up a direct debit for at least the minimum payment every month ensures you never miss the deadline, even if you intend to pay more manually.
If you are applying for a credit card for the first time, use an eligibility checker rather than applying directly. A soft eligibility search shows you your approval odds without leaving a mark on your credit file.
Free debt advice is available from StepChange and Citizens Advice if you are worried about existing debt before taking on a credit card.
1. What is the interest rate and is there an interest-free period?
Every credit card has a purchase interest rate, expressed as an APR (Annual Percentage Rate). Standard rates typically run from 20 per cent to 30 per cent APR. Many cards offer a 0 per cent introductory period on purchases, lasting anywhere from 3 to 24 months depending on the card.
If you plan to use the card for a large purchase and pay it off over several months, a 0 per cent purchase card is far cheaper than a standard card. Providers including Barclaycard, Halifax and NatWest regularly offer 0 per cent deals. The critical point: once the promotional period ends, the standard rate applies to any remaining balance immediately. Note the end date and plan your repayments accordingly.
2. Can you genuinely afford the repayments?
A credit card is not extra income; it is a loan you have to repay. Before you start using one, be honest about whether you can clear the balance in full each month. If the answer is no, you need to understand what the minimum repayment will be and how long it will take to clear the debt if you only ever pay the minimum.
The FCA requires credit card providers to show a warning on statements if paying only the minimum will take more than 18 months to clear your balance. At a typical 20 per cent APR, a £1,000 balance paid off at the minimum rate each month takes several years to clear and costs hundreds of pounds in interest. Aim to pay the full balance each month, or at least significantly more than the minimum.
| Balance | APR | Monthly minimum payment (approx.) | Time to clear (minimum only) |
|---|---|---|---|
| £500 | 22% | ~£12 | 6+ years |
| £1,000 | 22% | ~£25 | 8+ years |
| £3,000 | 22% | ~£75 | 10+ years |
Figures are approximate and assume no additional spending on the card.
3. How will the credit card affect your credit rating?
Using a credit card responsibly builds your credit score. Paying in full and on time each month demonstrates to lenders that you handle credit well. This makes it easier to get a mortgage, car finance or personal loan in the future on better terms.
The reverse is also true. Missing payments, exceeding your credit limit or applying for several cards in quick succession all damage your credit score. Lenders including Barclays, Halifax and HSBC use your credit history to decide whether to approve applications and at what rate.
Set up a direct debit for the full balance (or at least the minimum payment as a safety net) as soon as you receive your card. This prevents missed payments even if you forget to pay manually.
4. Do you have a poor credit history?
If your credit score is poor, you may not qualify for standard credit cards or the best rates. You will likely be offered a credit-builder card instead, with a lower credit limit and higher APR. Providers including Capital One, Aqua and Vanquis specialise in cards for people rebuilding their credit history.
These cards serve a useful purpose if used correctly: keep the balance low (below 30 per cent of the limit), pay in full each month, and your score should improve within six to twelve months. Never use a credit-builder card to fund spending you cannot afford; the interest rates are higher than standard cards.
5. Is there a better alternative?
A credit card is not always the right tool. If you need to borrow a fixed amount for a specific purpose, a personal loan gives you a set repayment schedule and a defined end date, which some people find easier to manage. Providers including Nationwide, Sainsbury's Bank and M&S Bank offer personal loans at competitive rates for borrowers with good credit.
If you are covering a temporary cash shortfall until your next pay day, a small authorised overdraft may be cheaper than a credit card (depending on your bank's rates). And if you simply want the convenience of card spending without the risk of debt, a prepaid debit card or a bank account with a debit card achieves the same thing without the ability to overspend.
Frequently asked questions
What happens if I only make the minimum credit card payment each month?
Making only the minimum payment each month means most of your payment goes towards interest rather than reducing the balance. A £1,000 balance at 22 per cent APR, repaid at the minimum payment only, can take eight or more years to clear and cost several hundred pounds in interest. Always pay more than the minimum if you can.
Does applying for a credit card damage my credit score?
A credit card application triggers a hard search on your credit file, which can reduce your score by a small number of points temporarily. To avoid unnecessary hard searches, use an eligibility checker (available on MoneySuperMarket, TotallyMoney or ClearScore) that shows your approval odds using a soft search that does not affect your score.
What is Section 75 protection on a credit card?
Under Section 75 of the Consumer Credit Act 1974, your credit card provider is jointly liable with the retailer if goods or services you purchase for between £100 and £30,000 are not delivered or are significantly misrepresented. This protection does not apply to debit cards or prepaid cards. It is one of the strongest consumer protections available for large purchases.
What credit card is best for someone with a poor credit history?
If your credit score is poor, look at credit-builder cards from Capital One (Classic), Aqua Classic or Vanquis. These cards have lower limits and higher APRs, but used responsibly they will help rebuild your score over 6-12 months. Check your eligibility using a soft search tool before applying to avoid unnecessary hard searches.
Can I use a credit card abroad without extra charges?
Standard credit cards typically charge a foreign transaction fee of 2.5-3 per cent on overseas purchases. Fee-free options for travel include the Halifax Clarity card and the Barclaycard Rewards card. If you already have a standard card and do not want to apply for a new one, a Starling or Chase bank debit card charges no overseas fees.