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Credit cards

All you need to know about credit cards

What's a credit card?

Credit cards are payment cards that allow you to borrow money in the form of credit from a credit card provider. Credit card providers, like Capital One, lend money through a credit card so that you can easily pay for products and services, such as in shops, restaurants or online.

You only have a fixed amount available to spend on your card, known as a credit limit. This limit is decided by your credit card provider when you apply for a card, but can be increased later if you prove to be a good customer.

You’ll get a monthly statement that will show you the details of all the things you’ve paid for on your credit card in the past month. It will also include the minimum payment that you owe your credit card provider and the date by which you need to pay it.

Credit cards make your life easier in many ways. They can be used anywhere in the world, both at home and abroad, and are really useful when you don’t want to carry a lot of cash or you want to buy things online.

They also provide a safe and secure way to make payments. So, for example, if there’s a problem with something you’ve purchased, that’s worth over £100, you may be able to make a claim with your credit card provider.

How credit cards can make your life easier

Your credit card can be used:

  • Anywhere you see that MasterCard and Visa are accepted
  • To pay for things in shops
  • To pay for things online
  • Contactless credit cards make buying things quick and simple
  • To take cash out from an ATM, also known as a cash advance or cash withdrawal
  • To transfer over a balance from another credit cardour credit card provider.

Get to know your credit card statement

Your credit card statement shows you all the aspects of your card including what you’ve spent, how much you owe (known as your balance), how much you need to repay, and when your payments are due.

The credit card statement also shows any foreign transactions you might have made abroad, cash withdrawals, balance transfers, monthly interest, and any fees you might owe.

Your statement will tell you what the minimum payment you‘ll need to pay is, and the date when you must pay it. If the balance is not paid off in full each month, you will be charged interest on the amount you’ve borrowed. Details of your interest rates and any fees you may be charged can be found in your credit card agreement.

You can also check your credit card statement online at any time, wherever you are, making it convenient and easy for you to manage your card and stay in control.

Make sure you check your credit card statement every month to find out how much you owe. You must pay at least the minimum amount that appears on the statement, although you will save money on interest and pay your debt off more quickly if you pay more than the minimum. The ideal option is that you pay off the complete outstanding balance in one go. If you can’t afford to pay off the full balance each month you will be charged interest on the full outstanding balance.

Build your credit rating

Classic credit card
Apply now for a Capital One Classic credit card

Our most popular card with over 4 million people accepted.

  • For people with bad credit or building credit
  • £200 to £1,500 credit limit
  • Up to two optional credit limit increases per year, subject to eligibility
  • Helps you stay on top of your spending when you set up email alerts

Representative example: Assuming a credit limit of £1,200 and an interest rate on purchases of 34.94% p.a. variable, you will receive a 34.9% APR representative variable.

Apply now

Is this credit card right for you?

Our Classic card could help you turn bad credit into a thing of the past by building your credit.

To build your credit rating and potentially be eligible for credit limit increases, use your card sensibly by making your monthly minimum payment on time and staying below your credit limit. Not doing so could harm your credit rating.

What is a monthly minimum payment?

There's a minimum amount you need to pay each month and we tell you what this is on your statement. You can repay more than this, up to the full balance - just make sure you pay at least the minimum. Paying only the minimum takes longer to pay off your balance and will cost you more money in the long run.

We're more likely to accept you if you:

  • Are over 18
  • Have some history of managing your credit even if you have had CCJs or defaults in the past
  • Are on the electoral roll

We're not likely to accept you if you:

  • Have not had credit in the UK before
  • Have declared bankruptcy in the past 12 months

Please note meeting these criteria does not guarantee acceptance.

For more product information read the:

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Credit is available subject to status and conditions. If you have applied for a Capital One card in the last six months your application may be declined. If you are not a UK resident please do not apply.

THE DIFFERENT TYPES OF CREDIT CARDS

Classic cards

Classic credit cards are available to anyone over the age of 18 as long as they pass credit checks and their application is accepted based on the information they provide. It’s usually the first kind of credit card that people get, with some specifically designed for people with a low credit score.

Premium cards

Premium credit cards typically have higher credit limits and lower interest rates, and are therefore only available to people that have a very good credit history.

Balance transfer

Balance transfer credit cards charge a low rate, sometimes as low as 0%, on any debts that you move over from another card, although there is often a fee to make a balance transfer. Credit card providers often offer favourable rates of interest to attract customers over from competitors. You can use this approach to help reduce your interest payments, which can be a quicker way of clearing any debt that you might have.

Rewards or cashback cards

Cashback credit cards allow you to earn money back whenever you make a purchase, like a reward scheme. Usually the cashback will be credited to your statement every month. Although some credit providers may choose a different method. The amount you earn back can depend on your credit provider, the purchases you make or even how much you use the credit card. You should always consider the interest rate and fees charged by cashback credit cards, even though you receive cashback you may be paying more in interest than you would with non-cashback cards.

Store cards

Branded store cards work in the same way as credit cards although you may be restricted to using them in a specific retail store or group of stores. When it comes to store cards it’s important to consider factors such as interest rate, as the store might charge higher interest rates than other credit cards.

Credit cards for bad credit

Credit cards for bad credit exist to help you build your credit and improve your credit rating in the event that you are not eligible for other types of card. They typically have a low credit limit that is easier to manage, which in time will show that you are able to manage your finances well through regularly paying off debt on time.

Choosing a credit card for bad credit is a good way for you to either start your credit journey, or improve your credit score if for any reason it has been negatively affected. By using this type of credit card you can eventually progress to a credit card with a higher credit limit and lower interest rate.

THE DIFFERENCE BETWEEN CREDIT CARDS AND DEBIT CARDS

You may already have a debit card linked to a bank account that you use to make purchases. While debit cards and credit cards can be used in similar ways they work in very different ways:

Debit cards

  • Debit cards use money that is already in your bank or building society account.
  • The maximum amount of money you can spend using a debit card is the amount already in your account plus any agreed overdraft.
  • Details of transactions are found on your bank statement.
  • If money has been withdrawn from your account without your permission you would no longer have that money, which you could have been saving, in your account. This, however, could be reimbursed in future.

Credit cards

  • Credit cards use credit issued to you by your credit card provider.
  • The maximum amount you can spend is the credit limit available on the card.
  • Any money borrowed must be paid back at a later date.
  • You'll find details of your transactions on your credit card statement.
  • Using your credit card for transactions, especially online, is safe and secure. In the case of fraud, provided it’s not a case of customer negligence, you would be reimbursed.

WHAT DOES 'APR' MEAN?

Credit Card APR is short for Annual Percentage Rate. Credit card providers calculate the APR based on the interest rate for purchases with the addition of any fees, such as annual fees. When choosing which card you want to get APR is a good way to compare credit cards, it can help you quickly see which one is right for you.

CREDIT CARDS PROTECT YOUR PURCHASES

Your credit card provides an added sense of security when making purchases. The law gives you certain rights when you make credit card purchases that cost between £100 and £30,000. In some situations you may be able to make a claim against the supplier, your credit card provider, or both. Instances where you can make a claim include if you never receive an order, when the item you bought isn’t as it was described, or if the supplier has gone out of business and couldn’t supply your order.

The benefits of using a credit card

  • You can improve your credit score and build your credit history whenever you use your card, as long as you stay within your credit limit and make at least the minimum monthly payments.
  • It's a secure way to pay
  • It can be used abroad, reducing the need to carry cash
  • It's a quick and convenient way to buy things

HOW TO CHOOSE A CREDIT CARD

Things you should think about before choosing a card

  • Interest Rate
  • Annual Fee
  • Credit Limit
  • Fees
  • Rewards and Incentives
  • How easy it is to manage

How to compare credit cards

One way to find out about and compare credit cards is by using a comparison site. Comparison sites are a great option when you want to find out which card might be best suited to your needs. They give detailed information about various credit cards from different brands, highlighting the pros and cons of each card so that you can see whether a particular credit card is right for you or not.

You can also look at the summary information on a credit card provider’s website to get a quick snapshot of the important information for a particular product.

APPLY FOR A CREDIT CARD

With so many credit cards on the market, and with so many different types, it can be difficult figuring out which one is right for you. That's why you should do a bit of research to find out as much as possible before you apply.

When applying for a credit card, there is always a risk of being declined. Being declined for a credit card could have a negative impact on your credit rating. To avoid this, you can check if you're eligible for a credit card in a way that won’t have a negative impact on your credit rating, for example using the Capital One QuickCheck tool. It will give you a definite answer to whether you'll be successful in your credit card application or not.

Always remember to answer the questions on the application form truthfully, as lying on a credit card application can be considered as fraud.

Have these details ready when you apply for a credit card

  • Your home addresses from the past 6 years
  • Date of birth
  • Employment Status
  • Length of time you have been with your current bank
  • Any credit card and store card numbers and balances if you want to transfer balances
  • Other information may be requested depending on the credit card provider

A QUICK WORD ABOUT CONTACTLESS CREDIT CARDS

What is contactless?

Contactless credit cards are really simple to use. All you have to do is hold your card against the reader to make a payment. No swiping or typing in your PIN. Because it's quick it's great if you're in a hurry while having all the benefits of regular credit cards.

They are as secure as Chip and PIN, and purchases are limited to £30 and under, without the need to enter your PIN (although you may be occasionally asked to use Chip and PIN for additional verification and security).

4 steps to paying with a contactless credit card

  • LOOK: Look for the contactless symbol when paying for purchases of £30 and under.
  • TOUCH: Touch your contactless card against the reader.
  • PROCESS: A beep or a green light shows your payment is being processed. Occasionally, for extra security, you may be asked to insert your card and enter your PIN or sign.
  • APPROVED: Your payment is approved.

CREDIT CARD TOP TIPS

Make at least the minimum credit card payments

Making the minimum payment will stop you getting charged a late payment fee. If you want to avoid paying any interest on purchases you need to pay your credit card balance in full every month. However, this only applies to the purchases you've made with your credit card, you may still have to pay interest on any cash withdrawals or balance transfers.

If you can't afford to pay the full balance off try to repay as much as you can, this will reduce the time it takes to pay back the balance, and save you money on interest.cation and security).

Don't use your credit all at once

Your credit card is there for when you need it, so don't get carried away using all your credit at once. You'll be charged interest on all the credit you have used and if you've borrowed up to your credit limit the interest could make your repayments difficult to manage. This can result in you being charged a fee and your credit card being blocked.

Think before withdrawing cash

As handy as your credit card is, it still has to be handled with care. Unlike debit cards when you use your credit card to withdraw cash you can be charged interest at a higher rate. You may also be charged daily interest and a cash withdrawal fee even if you pay your balance in full each month.