How to choose the best credit card in 2025: Expert tips

Credit cards are a convenience used by millions of us, helping to manage everything from grocery bills and big-ticket purchases to holiday spending abroad.  Last year, there were over 58.5 million in use across the UK.

And according to the latest figures from UK Finance, there were 385.6 million credit card transactions in October 2024, 2.6 per cent more than in October 2023. The total spend of £21.1 billion was 3.8 per cent higher than October 2023.

What's on this page:

1. How do credit cards work?
2. How many credit cards should I have?
3. How to choose the right card for you
4. Balance transfer credit cards
5. 0% interest on purchases credit cards
6. Cashback and reward credit cards
7. Travel credit cards
8. Low-rate credit cards
9. Credit cards to avoid
10. How to apply for a credit card

How do credit cards work?

Credit cards mean you are paying for things using credit from the card company. You will be billed for what you have spent every month. Every card has a limit on how much you can spend. You’ll be charged interest at an agreed rate every month.

Credit cards can provide valuable flexibility and benefits, such as additional consumer protection, low-cost borrowing options, and rewards like cashback or loyalty points for everyday spending.

Used correctly, they can be useful for helping you maximise interest you are earning on your savings elsewhere. For example, a 0% purchase card allows you to pay for major expenses, like a new sofa or holiday, while keeping your savings earning interest.

Similarly, using a rewards card for day-to-day spending means you can earn cashback or points, and your money stays in your account (where it can potentially earn interest) until the bill is due.

Credit cards also provide extra security over your purchase through Section 75 protection. In some cases they can help your credit score, by showing that you can manage credit responsibly  – as long as you pay your bill on time each month.

However, if not used carefully, credit cards can become a financial strain, with high-interest rates, mounting debt, and potential damage to your credit rating. Unless you have an 0% interest card, you should pay your balance off in full every month.

Guy Anker, money expert at Compare the Market, says: “Regardless of the card selected, always stick to key practices such as staying within your credit limit and making at least the minimum monthly payment on time to avoid penalties and maintain financial health.”

How many credit cards should I have?

There isn’t a set answer to how many credit cards you should have, as it depends on what you want to get from your cards, and your spending habits and preferences. It can be useful to have more than one to cover different circumstances: for example one that is best for cashback and one that is best for travel.

Having more than one can also be helpful if you mislay your card or if it gets unexpectedly declined. However many you have, you should make at least the minimum payments on time every month. Unless you have 0% interest, you should be looking to pay the balance off in full every month. 

How to choose the right card for you 

The secret to using a credit card wisely is selecting the best one for your personal circumstances and needs. With more than 120 cards on the market, it’s vital to shop around. 

Alastair Douglas, CEO of Totally Money, says: “Choosing the right card is key. Ask yourself why you’re applying for the card. Is it to reduce your debt, in which case you should be looking for a balance transfer? Or is it to buy something and spread or delay the payment – which is when a 0% purchase card should come in handy.”  

Balance transfer credit cards 

If you’re one of the 29% of over-50s with credit card debt, clearing that debt should be a priority, especially before you retire. Debt can eat into your income, and many credit cards charge high rates of interest. An interest-free balance transfer means your payments can help to clear the debt quicker, rather than just paying for the interest. 

Andrew Hagger, a personal finance expert at Money Comms, says: “You could switch your balance to a new card and pay no interest for up to two and a half years – this would help you clear your existing card debt more quickly.” 

Most balance transfer credit cards charge a 3%-4% transfer fee, but some are fee-free. Bear in mind that cards with longer 0% periods are more likely to have fees attached. So go for the lowest fee that has a long enough 0% period for you to be able to repay the debt.

Plan to pay off your balance within the 0% period to avoid high interest rates once the deal ends.

Use balance transfer cards just for clearing debt – avoid new purchases on the card unless the card also offers interest-free purchases (which most don’t). For everyday spending, consider a separate card with cashback or rewards.

0% interest on purchases credit cards

These cards let you spread the cost of large purchases over several months (in some cases up to more than a year) without incurring any interest. “If you’ve got a major purchase coming up and would rather not dig into your savings, you could consider a credit card offering zero interest on purchases,” says Hagger.

“If you repay your minimum balance each month and clear it before the 0% introductory rate ends you won’t pay a penny in interest.”

They also provide extra security over your purchase – as all credit cards do – through Section 75 protection. As with any interest-free credit card, it’s important to clear the balance before the 0% period ends to avoid high interest rates.

Cashback and reward credit cards 

Reward credit cards can add value to everyday spending by offering perks such as cashback, loyalty points, or travel rewards. 

Anker says: “If you always pay your balance in full each month, focus on cards that reward spending, such as cashback, air miles, or points that align with your lifestyle. For example, frequent travellers may benefit from cards with travel rewards, while others may prefer cashback cards that offer a percentage back on everyday purchases.”  

Most reward cards offer a flat percentage on most or all purchases. Some cards (including some that are not dedicated reward cards) also offer more generous cashback with specific retailers. Be aware though that these offers tend to change regularly, and you usually have to opt in to the specific deal in order to get the cashback – so you may not want to choose your credit card on that basis. 

Rewards cards work best if you consistently clear your balance, otherwise higher interest rates on outstanding balances can wipe out the value of your rewards. Don’t forget to factor in any fees, so that you can ensure the rewards you’ll earn will offset the costs.   

Travel credit cards

If you like to go abroad on holiday, a travel credit card can help you save on overseas spending by offering favourable exchange rates (typically better than you’d get if you buy foreign currency at an exchange bureau) and waiving foreign transaction fees. It’s important to choose the right credit card for this. 

“If you travel overseas and use your everyday credit card, it’s highly likely that you’ll be charged around 2.75% to 2.99% extra on each purchase transaction or cash withdrawal made whilst you’re outside the UK,” says Hagger. “So, every payment of £100 could end up costing you an extra £2.75 on top.” 

“By signing up for a credit card that doesn’t charge these additional fees when you’re abroad, you’ll save yourself a good bit of your holiday budget which you can spend on far more enjoyable things.” 

Low-rate credit cards 

If you prefer a no-fuss, all-purpose card, a low-rate credit card may suit you. These cards offer a long-term low-interest rate on purchases, balance transfers, and sometimes even on foreign transactions. 

If you regularly pay off your balance in full, you won’t incur interest at all. However, if you occasionally carry a balance, low-rate cards can help by charging interest rates of under 10% APR. 

Low-rate credit cards suit someone who wants one credit card for all their needs. But they are the jack of all trades, master of none. Often, selecting a specialised card, such as a balance transfer or cashback card, can better meet your needs and save you money. 

And the credit cards to avoid… 

There are lots of credit cards with no special features, often issued automatically by your bank or building society. While easy to obtain, if they don’t offer rewards or promotional offers, you could do better – especially as they often come with average to high interest rates. 

Many people either carry costly balances or pay off their bills in full without taking advantage of cashback or rewards. If you clear your balance each month, a rewards or cashback card may better suit your spending habits. For those with outstanding debt, a balance transfer card is usually a smarter option. 

In short, standard credit cards rarely offer the best value, so if you’re using one of these, you’re probably missing out. 

How to apply for a credit card 

Before applying for a credit card, check your credit rating and use a comparison website to perform a “soft” search, which doesn’t affect your credit score. This helps identify cards you’re likely to be approved for and reduces the risk of rejection, which could harm your credit score. 

Rejection isn’t always due to bad debt history; it may be because of a limited borrowing history or your income not meeting the provider’s criteria.