UK Credit Cards - UK Charge Cards - UK Prepaid Cards - Information

Welcome to the UK credit card information page. We are here to provide you information about the steps in choosing a credit card in the UK and how to use credit cards properly.

If you expect to always pay your monthly bill in full and other features such as frequent flyer miles don't interest you your best choice may be a card that has no annual fee and offers a longer grace period.

If you expect to use your card to get cash advances, you'll want to look for a card that carries a lower APR and lower fees on cash advances. Some cards charge a higher APR for cash advances than for purchases.

If you expect to carry over a balance from month to month, you may be more interested in a card that carries a lower interest rate which is stated as an annual percentage rate, or APR. Keep reading...

What is Annual Percentage Rate? - What is APR?

The annual percentage rate or APR is the way of stating the interest rate you will pay if you carry over a balance, take out a cash advance, or transfer a balance from another card. The APR states the interest rate as a yearly rate. If you carry over a part of your balance from month to month, even a small difference in the APR can make a big difference in how much you will pay over a year.

A single credit card may have several APRs! One APR may be for purchases, another for cash advances, and yet another for balance transfers. The APRs for cash advances and balance transfers often are higher than the APR for purchases (for example, 14% for purchases, 18% for cash advances, and 19% for balance transfers).

Tiered APR. Different rates are applied to different levels of the outstanding balance (for example, 16% on balances of $1-$500 and 17% on balances above $500). You should always read the fine print so you know how much of a balance you can carry, and what rates you will be charged.

Penalty APR. The APR may increase if you are late making payments. For example, your card agreement may say, "If your payment arrives more than ten days late two times within a six-month period, the penalty rate will apply." The only way to avoid penalty APRs is to pay on time. Once you trigger the penalty APR rule, the rate may increase and not drop again, even if you always pay on time after that.

Introductory APR. A popular marketing method is to offer an extremely low introductory APR to entice you to sign up to a card or transfer balances from other higher rate cards. These introductory APR offers can be excellent if the introductory period is long (6 months to 1 year) and the introductory rate is very low (0% to 5%). However, a higher rate will always apply after the introductory rate expires, so be careful not to carry too high a balance or you might be surprised at your payment amount after the introductory APR expires!

Delayed APR. With some cards, you pay a high APR up front, but a lower rate will apply in the future if your payment history is good. Introductory APRs also fall under the concept of a Delayed APR, except the future interest rate will be higher than the introductory "teaser" rate.

Fixed vs. variable Credit Card Rates

With some credit cards there is a "fixed rate" which means the APR doesn't change, or at least doesn't change often. Even the APR on a "fixed rate" credit card can change over time. However, the credit card company must tell you before increasing the fixed APR.

Other credit cards are "variable rate" which means the APR changes from time to time. The rate is usually tied to another interest rate, such as the prime rate or the Treasury bill rate. If the other rate changes, the rate on your card may change, too. Look for information on the credit card application and in the credit card agreement to see how often your card's APR may change.