8 common questions about credit cards answered

Thinking about applying for a credit card? Then you’ve probably got a few questions you’d like answered. The good news is, you’ve come to the right place.

Published

24 Apr 2018

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The low down on credit cards

There’s a lot of information out there about credit cards – including some pretty common myths and misconceptions. We’re here to answer some of the biggest questions out there so you can handle your credit card like a pro.

1. Will a credit card give me extra protection?

A major plus point for using a credit card rather than a debit card or cash is that you get extra protection on purchases thanks to Section 75 of the Consumer Credit Act.

So if a purchase of between £100 and £30,000 goes wrong, you could claim the money back  - giving you extra peace of mind when you’re shopping.

2. Can I withdraw money using my credit card?

If you’ve left your debit card at home and need cash quickly, you can use your credit card to withdraw money from a cash machine.

However, it’s important to remember that, because that’s not what credit cards are really designed for, there’s a chance you’ll be charged a fee for it. How much will depend on your credit card’s terms and conditions.

Your cash withdrawal may also be charged at a higher interest rate than regular credit card purchases and if you do it regularly, your credit rating might be affected.

man with paperwork and laptop

3. What do I need to apply for a credit card?

Exactly what you need to apply for a credit card can differ from bank to bank, but here are some of the things you might need:

  • Details of your monthly salary and annual wage
  • The addresses you’ve been living at for the last three years
  • Your bank account number and sort code
  • Details of other credit cards if you’re planning to transfer a balance

4. How do credit card repayments work?

When you sign up for a credit card, your bank agrees to let you buy things on credit and pay the amount back in instalments. Your bank will send you a credit card statement each month.

This will include a minimum monthly payment that you must pay by a set date. You could also choose to pay a higher amount back or even pay your balance off in full. It’s worth remembering that if you only pay the minimum amount each month, it will take longer to clear your balance.

If you don’t meet your minimum monthly repayment, you might have to pay a charge or your interest rate might go up. Missing a few payments in a row could even cause a dip in your credit rating.

5. What does credit card APR mean?

APR stands for Annual Percentage Rate, which is the amount of interest charged on a debt. That means that if you choose a card with a low APR, you’ll have less interest to pay each month and you might be able to lower your repayments.

6. How many credit cards can I have?

There’s no right answer to this one because it really depends on what kind of spender you are.

When you apply for a new card, your bank will look at the cards you have already, your credit history and how much other credit you’ve got to see whether giving you more feels risky.

Another little help: just because you get approved for more than one credit card, it doesn’t mean you should always take them. Having lots of credit could make keeping up with monthly payments tricky and make it harder to take out a loan or mortgage.

Man in kitchen with mobile

7. Why are credit ratings important?

When you apply for a credit card, your bank will want to know how well you’re likely to handle your credit. The easiest way for them to find out is to have a look at your credit rating, a score that’s worked out by looking at things like your credit history, past repayments and current borrowing.

8. How can I get a credit card if I have no credit history?

A limited credit history – or even bad credit – doesn’t mean you won’t be able to get a credit card. In fact, some starter or foundation card are designed to help you start building or repairing your credit rating.

You can find out more about our Foundation Card here.

Got more credit card questions?

We’ve covered some of the most common questions but if there’s anything else you need to know, speak to your bank to find out more. The more in the know you are, the easier it is to be a savvier credit card spender!

Important information

The content on this page aims to offer an informative introduction to the subject matter but does not constitute expert financial advice specific to your own situation. All facts and figures were correct at time of publication and were compiled using a range of sources.