What Are the Main Disadvantages of Getting a Credit Card?
Published 3rd of December 2012·Updated 25 April 2026
Reviewed by: Reviewed for accuracy April 2026
Credit cards have genuine benefits, but they also carry real risks. High interest rates, the ease of spending money you do not have, and the potential for lasting credit score damage are the main downsides. Understanding these before you apply will help you decide whether a credit card is right for you and, if so, how to use one safely.
Short Summary
Standard UK credit card interest rates range from around 20 to 35 per cent APR. Carrying a £2,000 balance at 25 per cent APR and making only minimum payments could take over 20 years to clear and cost more than the original debt in interest.
Credit cards make it easy to spend money that has not yet left your bank account, which can lead to overspending that compounds over time.
Missing a single payment leaves a negative marker on your credit file for six years, which can affect your ability to get a mortgage, car finance or other credit at a good rate.
None of these disadvantages apply if you use a credit card as a tool: spend only what you can afford, and clear the balance in full every month.
What interest rates do credit cards charge?
The representative APR on most UK credit cards is between 20 and 35 per cent. This is significantly higher than personal loans, which typically range from 6 to 15 per cent, and far higher than a mortgage.
The key point is that credit card interest only applies if you carry a balance from one month to the next. If you pay your full statement balance by the due date, you pay no interest at all. The danger comes when you start making only minimum payments.
| Balance | APR | Monthly minimum (approx.) | Time to clear | Total interest paid |
|---|---|---|---|---|
| £1,000 | 25% | ~£25 | 7+ years | ~£700 |
| £2,000 | 25% | ~£50 | 12+ years | ~£1,800 |
| £5,000 | 25% | ~£125 | 20+ years | ~£5,500+ |
Figures are approximate, based on minimum payments of around 2.5 per cent of balance.
Why do credit cards encourage overspending?
Unlike a debit card, a credit card does not immediately reduce your bank balance when you spend. This creates a psychological gap between spending and consequence that can lead to using the card more freely than you intended.
For people who already find budgeting difficult, this effect can be significant. A credit card can give the appearance of financial flexibility when the underlying situation is one of limited funds. If the card balance is not cleared quickly, interest charges add to the problem.
How can a credit card damage your credit score?
Credit cards harm your credit score in two specific ways:
Missing or late payments: Your payment history is the most heavily weighted factor in your credit score. A single missed payment registers a default marker on your credit file and remains visible for six years. This can result in being declined for a mortgage, car loan or a better credit card, even years later.
High credit utilisation: Credit reference agencies including Experian, Equifax and TransUnion monitor the percentage of your available credit that you are using. Using more than 50 per cent of your credit limit, even if you pay the balance in full, can negatively affect your score. Experian recommends keeping utilisation below 25 per cent.
Are there any other costs to be aware of?
Beyond interest, some credit cards carry additional charges:
- Annual fees: premium cards from American Express and some travel card providers charge £25 to £650 per year
- Foreign transaction fees: typically 2.5 to 3 per cent on purchases made in a foreign currency; look for a fee-free travel card if you go abroad regularly
- Cash withdrawal fees: using your credit card to withdraw cash usually costs around 3 per cent plus daily interest from the moment of withdrawal, with no interest-free period
- Balance transfer fees: typically 1 to 4 per cent of the amount transferred
Is a credit card ever the wrong choice?
For people with a history of debt problems or difficulty controlling spending, a credit card can do more harm than good. If you have previously struggled with credit card debt, overspending or missed payments, consider whether the benefits are worth the risk.
StepChange and Citizens Advice both offer free, confidential advice to help you assess your financial situation and whether taking on new credit is appropriate for you.
Frequently Asked Questions
What is the average interest rate on a UK credit card?
The average representative APR on standard UK credit cards is around 24 to 25 per cent, based on Bank of England data. Specialist credit-builder cards from providers including Capital One, Aqua and Vanquis typically charge 34.9 per cent or higher.
What happens if I only pay the minimum on my credit card?
You will pay a large amount of interest over a very long period. On a £2,000 balance at 25 per cent APR, making only minimum payments could take over 12 years to clear and cost more than £1,800 in interest charges alone. Always pay more than the minimum if you cannot clear the full balance.
Can a credit card cause me to go into debt?
Yes, particularly if you spend on credit for things you cannot currently afford and do not pay the balance off promptly. Credit card debt is one of the most common forms of problem debt in the UK. StepChange, the debt charity, dealt with clients carrying an average credit card debt of around £4,000 in 2023.
Will cancelling a credit card hurt my credit score?
Potentially, yes. Closing a credit card removes that credit limit from your total available credit, which increases your overall utilisation ratio if you have other balances. However, if you have no other debts and limited credit history, the impact may be negligible.
Do credit cards charge fees for cash withdrawals?
Yes. Most UK credit cards charge a cash advance fee of around 3 per cent of the amount withdrawn, with a minimum of £3, plus interest from the moment of withdrawal at a rate often higher than the standard purchase APR. There is no interest-free period for cash withdrawals. Avoid using your credit card at an ATM unless it is an emergency.
Are credit cards safe to use abroad?
Most credit cards charge a foreign transaction fee of 2.5 to 3 per cent on purchases made in a foreign currency. Cards designed for travel, such as those from Chase Bank, Starling Bank or Halifax Clarity, waive this fee. Check your card's terms before travelling and consider a fee-free card if you travel frequently.