Latest News

Why a credit card?

A credit card is a payment tool that gives you access to a flexible source of credit. Most people use their credit cards purely to pay for purchases – whether on the high street, online, or by telephone.

Customers who repay the outstanding balance in full and on time typically do not incur any interest or charges on their purchases. Others may choose to use their credit cards for occasional borrowing to help spread the cost of major purchases.

Within your credit limit, and subject to your terms and conditions, you can choose:

  • how much you spend;
  • how much you borrow;
  • how long you borrow for; and
  • how much you will repay each month, from the minimum repayment amount up to the full outstanding balance.

Many credit cards give you some period of interest-free borrowing for purchases, as long as the bill is paid in full every month by the payment date – although this may vary between credit cards. It is worth noting that when using credit cards for cash withdrawals, balance transfers or credit card cheques, interest charges will normally apply from the date the transaction occurs.

Charge cards are a type of credit card where the terms include the obligation to pay the account in full at the end of a specified period. More details on charge cards, store cards and other types of credit cards can be found in the Types of credit cards page.

A credit card offers many potential benefits but, like any credit product, it can also have downsides if used irresponsibly. Credit cards are just one way of borrowing money. If you want to borrow for the longer term then a personal loan may be more appropriate.


Used sensibly, credit cards can provide:

  • Free short-term credit on purchases, as long as you always pay your bill in full by the date shown on your statement.
  • A safe and convenient way to pay for goods and services, particularly over the internet, by telephone or by mail order, both in the UK and abroad.
  • Protection against fraud - if you are the innocent victim of fraud you will not be expected to pay.
  • Incentives for using a card, such as loyalty points. A truly world-wide currency, as credit cards are accepted in almost all countries globally.
  • Perhaps the most flexible and convenient way of borrowing money in the short term.
  • Additional consumer protection benefits (particularly Section 75 of the Consumer Credit Act); so you may find a credit card to be a more sensible choice online.
  • Credit card accounts can usually be managed either over the phone or on-line.


Used irresponsibly, credit cards can:

  • Lead to unplanned levels of debt that you could find difficult to repay.
  • Incur charges if you make late payments, miss a payment altogether or go over your credit limit.
  • Damage your credit rating if you continually make late payments or miss them altogether.
  • Cost you more and take you longer to pay-off than the alternatives such as a personal loan, particularly if you only ever make the minimum repayment.
  • Make it difficult to manage your finances if you have more cards than you need.

You must always be honest and responsible when completing an application form. If you lie you could be charged with defrauding the card company and risk prosecution.

Getting a credit card is as much about responsible borrowing as it is about responsible lending. Remember that your credit history may affect your ability to get the credit card you want.

Always use your card in a responsible and sensible manner

Glossary View Items Highlight Unhighlight
You are here:  Home / Consumer / Individual / A guide to credit cards /  Why a credit card?
Close Glossary

Glossary of words on this page