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Credit Cards for Beginners

Best UK Credit Cards for Beginners

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When you are in search of the best credit card for 2021, you have to create a general understanding of their benefits, demerits, and types. Through this, you can take informed decisions. Here, we have provided these details that can help you select a good starter card in the UK. So, let us dive right into the specifics without wasting any more time.

What are credit cards?

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Before we get into the details, let us have a look at what credit cards are. Even though most of us use them for making payments or shopping, we need to know the details. A credit card is a type of financial product that allows flexible borrowing against a revolving line of credit. It is a payment card issued by a financial institution, typically a bank. If you are searching for the best starter credit card to build credit, we have got you covered.

Through this, a cardholder can borrow funds from the concerned financial institution. Since you would be borrowing money from the institution, you will have to pay the money back. Here, you will have to provide the interest you have agreed to pay.

A credit card provides the cardholder with a permanent line of credit. With a good starter card, you can purchase products based on your interests. Here, you have to ensure that the total you borrowed from the credit card provider is less than the credit limit that the provider has set.

Through this, you can borrow money up to your credit limit. You have countless ways to use your money. For example, you can use it for making payments in a shop or withdrawing cash.

Credit cards allow the consumers to build a continuing balance of the debt. However, it has a close relation to the interest charged by the financial institution. The cardholder must pay a defined minimum portion of the amount owed by a due date or may choose to pay a higher amount. The credit issuer charges interest on the unpaid balance if you fail to pay your billed amount fully.

The key features of the best starter credit cards are that they can reap cash, discounts, travel points, and many other perks. Another point to consider that they do not have a repayment structure similar to loans. Most of the best credit cards for 2021 offers more flexible methods to repay the amount borrowed.

What are the benefits of credit cards?

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Sometimes you might be searching for credit cards for bad credit. You could be trying to compare credit cards in the UK with others. However, you have to remember that credit cards have a lot of benefits over debit cards. Once you obtain a clear picture of these perks, it will be helpful for you to choose the best starter credit card to build credit scores.

  • Improves your credit score

By using a credit card, you can improve your credit score. When you have a good credit score, it is a great way to show lenders and credit holders that you know how to manage credit and borrow money. Responsible spenders can raise their scores with a history of expenditures, timely payments, and by keeping their card balances low relative to their card limits. Therefore, if you want to get a mortgage or a personal loan in the future, having a credit card can be helpful. Through this, the mortgage lenders know that you can handle and have experience in managing your credit. It is an excellent way to build credit when you get the best starter card.

  • Protection for big purchases (Section 75 protection)

In the UK, there is a law called the Consumer Credit Act, passed in the 1970s. It comes with certain protections under it. It means that the credit card company is equally liable for any purchase you make. It has a close relation in terms of the services provided or the quality of the good.

If you shop for any product or book yourself a flight using your credit card, you can get your money back. Here, your credit card company would assist you in procuring the money. So, if you are making any purchases like electronics or going on holiday, try to make your payments using your credit card.

Here, if there are any problems, the credit card company can help you with money reimbursement. However, the chances of obtaining the same benefits are low when you opt for debit cards.

  • Separate spending and saving account

You can separate their spending from the account where you have most of your money stored. It is a helpful tip for those planning to get the best starter credit card to build credit. Through this, you can gain protection from any form of fraudulent practices that might happen.

If your card details get leaked due to some unprecedented reasons, you can reduce the chances of losing your money. The reason is that your credit limit could be lower than that of the amount you have in your debit card account.

  • Associated Perks

Credit cards offer the cardholder a bunch of perks. However, it will depend on the types of credit cards you have obtained. Some of the advantages that you can get include lounge access, free credit scores. In some cases, the cardholder may be able to acquire loyalty points or cash back. The credit card companies provide them as a form of reward for using the credit card as well.

  • Emergencies

When you opt for the best starter cards, you have the option to borrow money in case of an emergency. During any emergency, it can be one where you have to provide pre-payment to enable access to the solution right. Credit can be a saviour in this kind of situation. If you can repay this full amount within the stipulated period, there will not be a need to pay any form of interest.

  • Teaches you financial discipline and how to manage credit

A credit card is a great gateway or avenue to start managing your credits and build a good credit score on a much smaller basis. For anybody who wants to improve their financial literacy and financial management, a credit card is a great way to learn. So, it will be helpful for you to start by obtaining the best starter credit card.

What are the disadvantages of credit cards?

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As a beginner, you have to be aware of the drawbacks associated with credit cards, and can help you in making the right decision. Some of them include debt, credit score impact, and cost. Having an idea of these factors will help you purchase one of the best starter credit cards to build credit.

  • Spending can lead to debt

If we have a credit card, there is a high chance that we would rely upon them to spend money. There are numerous studies that support these factors as well. When you shop using your credit card, you must be aware that you are spending your credit card company’s money. Eventually, you must repay the money with interest.

Even though you have to make a minimum purchase every month, you have to keep track of it when you get a good starter card. Self-control is mandatory when using a credit card. If a credit card can become an excuse to come out of your spending comfort zone, it can lead to credit card debts.

  • Credit score impacts

You can maintain your FICO scores by paying your bill on time and keeping balances on credit cards low. However, if you are misusing credit cards, it could hurt your credit history. Your credit scores can drop drastically under these conditions. They include if you have the habit of paying late, close down older accounts, or apply for new credit cards too often.

You can stay on track by setting up credit card alerts to notify you about your payment due dates and card balances. Through this, you can avoid delays that might happen without your notice. It can help to make payments on time and avoid maxing out your credit limit.

  • Interest and fees

Before getting the best travel cards for beginners or good starter cards, remember that they are short-term loans. Here, you will have to pay back what you spend with interest. With the interest rates and the fees, your credit card company can calculate your annual percentage rate (APR).

As your APR increases, you will have to pay more to carry a balance from month to month. You should be aware of your card’s annual fee. You have to consider if your card has a foreign transaction fee, a balance transfer fee, a cash advance fee, a late payment fee, or a returned payment fee.

  • High introductory interest rates

You would receive the subsidised introductory rate for a fixed duration, extending between six to twelve months. After that period, you would have to pay higher rates. All credit cards will charge some fees and interest. Some credit cards often levy a rate of 20 to 30 per cent after you miss a payment. In other cases, they take a fixed amount without change to the interest rate. In some cases, there can be a universal default as well.

Through this, even the best starter cards can create a snowball effect. Through this, a customer could find themselves with unexpectedly high-interest rates. For avoiding these situations, you would have to make payments using your debit card. It is a feasible way for you to evade the increase in your interest rates.

  • Hidden costs & over-limit charges

If you are a consumer who keeps their account in good order, you might find interests taking up the highest portion of your expenses. When we refer to maintaining an account with good order, we refer to staying within the credit limit and making at least the minimum monthly payment. However, if you surpass your credit limit or make late payments, you could obtain higher chargers.

What are the different types of credit cards?

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Whether you want the best travel credit cards for beginners or a good starter card, you have to look into the different credit card types. There are innumerable varieties of credit cards with unique features and benefits. You have to opt for a credit card based on your intended spending. Depending on this factor, you can choose a card that works well for you.

  • 0% purchase credit card

Using these cards, you can put your full balance and pay it off over a series of months. During this period, there would not be any interest in your card. Through this, you can pay the total amount in small increments.

These cards are beneficial for those who want to make large purchases such as a holiday or a car. So, it is imperative to clear the balance before the end of the term. By doing so, you can prevent incurring additional interest charges.

  • 0% balance transfer credit card

With these credit cards, you can transfer the balance from another credit card or a personal loan. However, you would have to pay a small transaction fee. When you use these cards, you do not have to worry about interest for a set series of months. It can rely upon your credit card company as well. You have to use this card as a method to pay off any outstanding balance. However, it is best not to use these cards when it comes to making purchases. The reason is that the interest rates can be different when you purchase items using this balance transfer credit card.

  • Money transfer credit card

Here, you borrow the credit amount from the credit card provider, and the money gets transferred to your bank account. You have to repay it as per the time duration set by your credit card company.

You can use these best starter cards while making a purchase or paying off any outstanding debts. Some money transfer card offers no interest for the designated payback duration. Through this feature, it allows better management of the borrowed credit.

  • Reward/ cashback credit card

You can use these types of credits as you use your debit card. The reason is that the cardholder goes through the regular monthly spending and purchases. By adopting this process, you can obtain cashback and rewards. Some of these cards have deals with certain retailers and supermarkets. Through this, you can gain better opportunities to earn points and rewards.

  • Travel credit card

If you plan to go for overseas holidays or business trips, these cards are the best options. These cards permit you to withdraw cash from an ATM abroad directly. Here, you do not have to worry about the transaction fees. You have the option to spent money using your credit card as well. When you do so, you do not have to worry about the interbank exchange rate or bank fees.

  • Credit building credit card

If you wish to find the best starter credit card to build credit, these cards can be highly beneficial. They are ideal for students or people with less credit history.

Credit building credit cards have low borrowing rates compared to others. Using these cards, you cannot usually borrow more than 2000 pounds. However, it will vary from one individual to another, depending on your credit score.

These are the different cards to consider buying when you are in search of the best starter credit cards for 2021. Based on your financial requirements and goals, you have to finalise the type of card you wish to purchase. By using the correct methods of paying, you can use a credit card with ease.

Best credit cards for 2021

Finding the best credit cards for 2021 can be a hassle, especially if you are a beginner. Regardless of your financial situation, having a clear awareness of what the financial institutions are offering you can be helpful. Here, we brought together some of the best starter cards and credit cards that you can select based on your requirements.

Virgin Money All Around Credit Card

These cards are available to those who are above the age of 18, and it is best suited for those who possess a good credit rating. As per the current guidelines of Virgin Money All Around credit card, you must have a minimum income of 7000 pounds to apply for this credit card. It is also one of the best starter cards. The credit card is currently available only to UK residents.

When it comes to balance transfer, you can do a 0% transaction for the first 19 months. However, you would have to provide 2.9% as the fee during this time. Even for purchasing, there is no fee for the first 19 months for Virgin Money All Around credit card. When it comes to money transfers, the fee you have to pay is 4%. After the first sixty days, you would have to pay 5% as a handling fee for any balance or money transfer. Here, you have a representative APR, which is a variable for 21.9%.

With Virgin Money All Around credit cards, you can receive promotional rates from the day you have opened your account. When you are applying for this credit card, ensure that you will be paying off your dues on time. It is applying for all the credit cards as it can be beneficial for you in the long run. If you fail to pay the dues or go over the limit mentioned by the institution, they will start withdrawing your promotional rates. It would come into effect from the start of your statement period. So, you must keep track of these factors while applying for the best starter credit card to build credit.

Barclay Card Platinum Balance Transfer

You can apply for this platinum card when you are above the age of 18. Besides that, you need to have an income of 3000 pounds, and you have to be a UK resident. While opting for this good starter card, you need to maintain a decent rating.

When it comes to Barclay Cards, you can get it for 19 or 24 months. Based on these durations, the balance transfer, representative APR and other factors related to the card changes.

Firstly, let us have a look at the cards for 19 months. Here, you can opt for zero transactions. But, you would have to pay 1.5% as the fees. Besides that, you don’t have to pay anything as fees while you are purchasing products for the first three months. Here, the representative APR is 29.9% of the APR.

When customers opt for Barclay cards, they decide to opt for a 1200 credit limit often. Through this, they can obtain 21.9% as APR, and the purchase rate will be 21.9% for a year. If you are looking for the best starter credit card to build credit, this can be an excellent option for you.

Now, let us have a look at the card for 24 months. Here, you have to pay 0.9% as fees even when you are not conducting any form of transaction. When it comes to purchases, you do not have to pay anything for the first six months.

For representative APR, it is 21.9%. Here, you need to have a minimum income of 3000 pounds. Most of the credit card users opt for the 24 months Barclay card with 21.9% as the representative APR. When you do so, you would have a purchase rate of 21.9%. You have to transfer the balance within 60 days for acquiring a 0% deal as well.

M and S Bank shopping plus credit card

When you are applying for this best starter credit card, you need to be 18 years of age. Besides that, you have to be a UK resident, and these cards require a good rating. Before you start using M and S bank shopping plus credit card, here are a few points to help you out in making the decision.

When it comes to bank transfers, you would have to pay a minimum fee of 2.9%. It is applicable even if you have made 0% transactions during the 20 months duration. Here, the minimum amount that you have to pay would be 5 pounds. You have to do so even if you have not used their bank transfer feature.

When it comes to purchases, you don’t have to pay a fee for the first 20 months. With representative APR, it is 21.9%. You have to transfer the balance amount within 90 days. Through this, you can procure a 0% deal. If you fail to do so, you would have to provide a 2.9% fee along with a 21.9% variable rate paid annually.

Sainsbury’s Bank Balance Transfer credit card

Here, you need to have a minimum account balance of 10,000 pounds. It is a premium card that is available to those who are above the age of 18. Besides that, it has a good rating as well.

When it comes to Sainsbury bank balance transfer credit cards, you can obtain them for 26 months. Here, you have to pay 1% as fees even with 0% bank transactions. The minimum amount that you have to provide for the same will be three pounds.

While purchasing using this credit card, you do not have to pay a fee for 0% usage. However, after that, you would have to pay the fees. When it comes to representative APR, you would have to 21.9%. You could obtain the 1% transaction fee for bank transfer as per the current offers. But, there could be changes for the same in time.

If you are proceeding with this, it is a good starter card option. However, you have to keep track of the changes that might be happening. Sometimes, they might provide with 0% interest period on bank transfers as well. Apart from that, these cards are available for 26 and 18 months duration. You can obtain them based on your circumstances.

TSB Platinum Balance

Another best starter cards option for you will be the TBS platinum balance cards. Her,e you can acquire the card if you are above 18 years of age and a UK resident. Currently, they have not mentioned any minimum balance required. But, they could add it in the future.

Here, the fee for bank transfer is 2.95% of the amount. It is applicable for 17 months with a transaction rate of 0%. When it comes to the purchase fee, you do not have to pay any for the first three months. After that, you would have to make payments based on the purchases you are conducting. When it comes to representative APR, it is 21.9%.

With this credit card, you need to transfer a balance within 90 days after starting your account. However, if you fail to pay within the given duration, you would have to pay 5% fees along with a 21.9% annual rate. When it comes to credit limits, interest rates, promotional periods, and other factors, it varies based on your financial circumstances.

Virgin Money Balance Transfer credit card

You can apply for the Virgin money balance transfer credit card if you have 7000 pounds with you. Besides that, you have to a UK resident above the age of 18 years to obtain this card. Here, you can conduct bank transfers with an interest rate of 1.2% fees for the first 27 months.

It is applicable only when the transaction rate is 0%. When it comes to purchasing, you can obtain 0% fees for the first three months. With responsible APR, it is 25.9%, which is higher than the other banks that we have discussed above.

With the Virgin money balance transfer credit card, you have to transfer the balance within the first sixty days. Through this, you can obtain the 0% deal that we mentioned above. Otherwise, you would have to pay 5% as fees for transactions with a per annum rate of 25.97%. So, you have to ensure that you are on track while opting for a credit card.

Amazon classic credit card

Amazon classic credit card is an excellent starter card option for beginners. You can obtain this card with a ten pound Amazon voucher as an offer as well. However, when we look at the credit limit offered by Amazon classic credit card, it is comparatively higher than most other good starter cards.

Here, it is 500 pounds, which will be beneficial for those who are starting with credit cards. It would be helpful for them to set their credit scores and work their way up.

For the first three months, there is a 0% interest rate. However, it is 29.9% after these initial rates. When it comes to repayment, you can make them monthly and also, with time, you can opt for an upgrade. Through this, you can obtain an Amazon Platinum credit card. Besides that, Amazon credit cards also offer cashback reward points, which is an amazing feature that makes it one of the best credit cards for 2021.

TESCO Foundation credit card

You can apply for a TESCO Foundation credit card if you are above the age of 18 and a UK resident. Here, the credit limit is 200 pounds, which is yet another factor to note. Compared to the other best starter cards, the interest rate for this credit card is 27.5%.

Here, you would have to have a minimum repayment of 25 pounds to stay on track and enhance your credit score. Apart from that, you can work your way up when it comes to your credit score. Even though you might get a credit limit of 200 pounds in the beginning, you can increase it to 1500 pounds with time.

Another feature that differentiates TESCO cards from others is that it lets you combine your credit points. Besides that, they are highly suitable for those who are looking for entry-level credit cards.

These are some of the best credit cards for 2021. Once you have procured a detailed understanding of credit cards, it will be easy for you to make your decision.

Whether you are looking for the best starter cards or the best travel cards for beginners, remember that research is key. Here, you have to look into the different options provided by the institutions and find one that aligns with your financial requirements. Through this, you can build your credit score and move your way up.

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Explore the best credit card for 2021 through our beginner’s guide that will help you in choosing the correct credit card providers and cards in the UK.

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