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Got a credit card? January's bills are coming in!
24 credit card need-to-knows (even if you don't have one)

The 7 different credit card types | Slash interest to 0% | Credit cards' secret superpower | Shift partner's debt | Why 'no card' is bad | Never withdraw cash | Stooze | Debt help

As January's dark days fade into February, many have felt a stab of pain as the letter box flips open and the post-Christmas credit card bills drop on to the mat. For others though, they bring a smile, as they show no interest, and cashback earned. As Martin says...

"Credit cards are like fire. Used right, they're a great tool. Used wrong, they burn. Done right, they pay you and give extra protection. Done wrong, it's a debt nightmare."

So we've 24 credit card need-to-knows, everyone should scan through.

1. Everything depends on if you repay IN FULL each month - miss by even a penny and it's all change. It's Martin's catchphrase for a reason. On a typical 21.9% APR card, if after spending £1,000 on an empty card in a month...
- Repay £1,000. Interest: None.
- Repay £999.99. Interest: £17.
This is because if you don't repay in full, even if there's only a penny left, you're usually charged interest on the ENTIRE AMOUNT, not just what's left. Clear in full and you pay none.
That means repay IN FULL and you can ignore the interest rate and pick a card to rake in the perks. If not, all focus should be on the interest.

2. Paying card interest? STOP. Check if you can shift it to 0%. It only takes 2 mins. Put your details into our 0% Balance Transfer Eligibility Calc and it'll show the card you've best chance of getting to pay off your existing debt, so you owe it, but at 0%. This way, your repayments clear what you actually owe, rather than mostly just the interest.

Sam recently emailed: "Last week I excitedly opened up the weekly MSE email and spotted the Barclaycard 29mth 0% balance transfer. I thought I've got nothing to lose on a soft search and it came back as 100% pre-approved! Now I have a £7,500 limit and have transferred all card balances on to it. Amazing work."

If you've a choice, go for the card with the lowest fee in the time you need to clear the debt. Unsure? Go long. Full help in Best balance transfers, but here's our round-up of the top cards (if a card is an 'up to', you may get a shorter 0% if you're not pre-approved)...

If you're new to switching debt, here are the golden rules...
a) You can't transfer between two cards from the same banking group.
b) Clear the card before the 0% ends, or you pay the full rep APR.
c) Never miss the min monthly repayment, or you can lose the 0%.
d) You must usually transfer within 60 days to get the 0%.
e) Don't spend/withdraw cash. It isn't at the cheap rate.

3. You can shift your partner's debt to your 0% card (not a decision to take lightly). A few major lenders allow you to transfer a balance from your partner's debt on to your 0% card - useful if one of you has a better credit history, so is more likely to be accepted.

One top newbies deal that allows it is Barclaycard 29mth 0% (3.45% fee). But see a full list of lenders that allow partner balance transfers.

Warning: If you do this, your partner's debt legally becomes yours - making it your responsibility to pay off. Never feel forced into doing this - see Martin's financial abuse help blog if you do.

4. No credit card? That's not the savvy thing to do (unless you don't trust yourself). Many are anti-credit cards as 'neither a borrower nor a lender be'. Yet credit cards have two purposes:
- A means of paying for stuff.
- A means of borrowing yet this is neutralised if you pay off IN FULL each month, stay under the credit limit, and don't withdraw cash.

And looked at just as a way to pay for stuff, they're great, both because you can get paid to spend via cashback cards (more in a mo) and you get greater spending protection.

Of course though, if you struggle with impulse control and worry you may not follow the strict rules needed to make cards work for you, play safe and don't go near 'em.

11. Use a bad credit card to get a good one. If you've poor (or no) credit history, you're unlikely to be accepted for credit, including for mortgages, contract mobile phones, and sometimes even energy bills. So you need to build a history as a good credit citizen.
This is a catch-22 situation, as to get credit, you need (good) credit. So one solution is to get a horrible credit (re)build card. Horrid because if you fail to fully repay, the interest rates are hideous. However, if you get one, spend £50 to £100 each month on it (do not withdraw cash) and repay IN FULL each month for a year or so, and it'll rehabilitate your ability to get credit. Yet any mistakes will make it worse.
Our Credit Rebuild Card Eligibility Calculator includes a range of cards, depending on the severity of your credit issues.

12. Credit cards have a secret purchase protection superpower. Under the Section 75 law, buy something costing £100.01 up to £30,000 and pay for any of it, even a penny, on a credit card, and the card firm's jointly liable with the retailer for the WHOLE amount.
Then if things go wrong, you've a legal right to go to the card firm as if it was the retailer. This is especially powerful if, say, the retailer goes bust, is a long way away, or says 'take me to court'. So if you make an important purchase, put at least some of it on a credit card (paid off in full, obvs). Even better, use a reward card.
Even when Section 75 doesn't apply - so for things under £100 or if there's a 'break in the causal relationship', eg, if you book a holiday via a travel agent - you still get the same chargeback protection as a debit card, which can help you get money back when things go badly wrong.

13. DANGER! Minimum payments are designed to keep you in debt till you've white(r) hair. Borrow £3,000 aged 23, make just the minimum repayments, and shockingly you'll still be paying it off DECADES later.
And that's an improvement, as when MSE first started, some cards' minimum repayments left you perpetually in debt. Regulation changes now mean it must cover at least the interest, but only barely.
The problem with minimum repayments is what you pay reduces in line with what you owe. Instead, assuming you don't borrow more, fix repayments at the first month's minimum payment as we know you can afford it (or more if possible)...

For a £3,000 debt on a typical card at 21.9% APR:

- Min payments: Cleared after 28yrs costing £4,790 interest.
Yet the min payment in month one is £80, and if you fix it at that...
- Pay £80/mth: Cleared after 5yrs costing £1,740 interest.
Use our Minimum Repayment Calc to see how long it'll take you.
14. ...yet if you've multiple debts, pay the minimums on all but one. List all debts, including overdrafts, in APR order, as the one with the highest interest rate is growing fastest. So target all spare cash to clear that (even if it's the smallest debt) and just pay the minimums on all the others. Once the most expensive is clear, target the next highest APR rate and so on. This way, you'll clear your debts quicker.
15. Thankfully, card firms must pay your highest interest-rate debt off first. Even on the same card, different transaction types usually have different interest rates, so a purchase may be 18%, a balance transfer 0% and a cash withdrawal 29.9%.
It used to be that card firms paid the lowest interest-rate debt off first, which was a nightmare and trapped costly debt in. Then after a campaign, which MSE was part of, this was changed.
Now, your repayments first go to cover interest. After that, it's the highest interest-rate debt first - regardless of when it was accrued. So with the rates above, the cash withdrawal would be cleared first, then the purchase debt, then the balance transfer.

16. Withdrawing cash on credit cards can kill a mortgage application. Don't do it regularly, as that can be seen by some underwriters as a sign you're struggling. Plus even if you pay off IN FULL, you'll still pay interest on the withdrawal, and at a rate higher than that on spending. See our special guidance if withdrawing cash overseas on a specialist card.
17. Don't diss Direct Debits - always have one set up for credit cards. Miss a payment and you can be fined, lose any 0% deal, and it can hit your ability to get credit in future. The best route is to clear the card in full, and set up a Direct Debit to do that (if they don't offer it - which is naughty - call them and ask, and they should do it).
If you can't do that, just pay what you can each month. But still set up a Direct Debit, even if only for the minimum. Then you can (and should) manually pay more each month, but this way there's no risk of you missing a payment and ruining things.
18. Rejections may be caused by errors on your credit file. You should always check your credit files at the three main credit reference agencies once a year, before any major application, and if you're getting rejected. You can check them all for free.
Go through line by line - even minor errors (like wrong addresses on old, but still live, accounts) can cause problems. Do also see my full 38 tips to boost your credit score guide.
19. You don't always want it to be hard (a soft search is better). Most applications are 'hard' searches, which'll usually appear on your file whenever you apply for a credit product. Too many of these - especially in a short space of time - can be negative.
Yet when you check your credit file, use an eligibility calculator, or in a few rare applications, a 'soft search' appears there. While you see this on your credit file, lenders usually DON'T (and if they do they can't use the info), so it has no impact. So when you check your credit file, don't worry too much about the soft searches.

20. Stooze (right) and you don't lose. Stoozing is where you deliberately artificially build up borrowing at 0%, in order to save it at high interest (say 5%), so that's roughly £50 annual profit per £1,000 debt (and some have earned £10,000s doing this). This is ONLY for the financially savvy and disciplined though. See the How to stooze guide.

21. There aren't joint personal credit cards in the UK. All additional cardholders are just that. The main cardholder is SOLELY responsible for the debt. See our Joint credit cards guide.

22. The word 'representative' before APR is a kick in the face. The 'annual percentage rate' (APR) is used by credit card providers to tell you the effective annual interest rate once all costs are factored in.
Yet every card (and most loans too) say 'representative' APR. That one word has a huge impact. It means only 51% of successful applicants need to be given the stated rate. The rest of those who are accepted can be charged more, without limit. Annoyingly, in most cases the only way you'll know is by applying. So check after applications.

23. Stay in control by setting up spending alerts. If you're worried about overspending on a credit card, many providers let you set up spending alerts, meaning you'll receive a text message, email and/or mobile notification when your spending passes your set level, or when you're nearing your credit limit.

24. Struggling to pay? Get free debt help. The tips above are about cutting the cost of interest, but that still may leave you in a difficult position, which means you'll need a different tack. So Martin's developed three questions you should ask yourself...
- Do you struggle to meet minimum monthly payments?
- Is your total debt (not mortgage/student loan) over 1yr's salary?
- Do you have sleepless nights or depression/anxiety over debt?
If you answer 'yes' to any of these, forget trying to play the system, and instead get free, one-to-one debt-counselling help from Citizens Advice, StepChange, National Debtline, or CAP (which gives emotional support too).
They're there to help, not judge. The most common thing we hear after is: "I finally got a good night's sleep." Just go for it, read inspiring stories in our Debt-free wannabe forum, and also see our Mental Health & Debt and Debt crisis help guides.