Credit Cards

A credit card lets you borrow money up to a set limit and pay it back later. You can use it to buy goods anywhere, including over the phone, online or by post, and you can get one from banks, finance companies and larger supermarket and store chains¹. Each month you receive a statement showing what you have spent, and you then choose how much to repay: the full balance, or a smaller minimum amount with the rest carried over as borrowing that interest is charged on¹.

Used one way, a credit card is a short-term, interest-free way to pay that also gives you strong legal protection on purchases between £100 and £30,000². Used another way, it is one of the more expensive forms of everyday borrowing: credit card rates are high and tend not to move with base rate changes, and paying only the minimum can stretch a modest balance over many years³. Which of those two things a credit card becomes depends almost entirely on how you repay it.

How a credit card works: borrowing up to a limit and repaying monthly

A credit card is a revolving credit agreement. The card provider sets a credit limit, which is the most you can owe at any one time, and you can spend, repay and spend again within that limit for as long as the account is open. Some credit cards have a credit limit, meaning you will be charged if you go over it⁸. The limit is set by the provider based on your circumstances when you apply, and it can be reviewed over time.

Each month the provider sends a statement listing your transactions, the balance you owe, the minimum payment and the date by which payment is due. You then decide how much to pay. If you do not pay back all that you owe when payment is due, you may be charged interest⁸. The amount of interest varies between providers, so it is worth comparing what different cards charge before choosing one¹.

A credit card is different from a charge card, which is sometimes confused with it. With a charge card, the amount borrowed must be paid off in full at the end of the agreed period, usually each month, and interest is not charged on the amount you borrow¹. A credit card gives you the choice to carry a balance instead, at the cost of interest.

If you already have card debt, the first thing to do is stop using the credit card you want to pay off. This means the amount you owe stops growing, making it quicker to repay⁵. The guide to how credit cards work covers the mechanics in more detail, and credit card limits explains how limits are set, raised and lowered.

Pay the full balance on time and purchases cost no interest

The single most important rule about credit cards is this: if you pay off the whole amount owed on the card by the due date, you will not be charged interest on your purchases⁴. Provided you pay the bill in full and on time each month, you will not be charged interest². Most credit cards offer an interest-free period on what you have bought if you pay off your bill in full⁹.

This is what makes a credit card potentially free to use. The interest-free period is not a promotional offer: it is how standard credit cards work when the balance is cleared every month. The card provider is effectively lending you the money for your purchases for nothing, in the hope that you will eventually carry a balance and pay interest.

The rule cuts the other way too. If you do not pay off the full amount every month on a credit card, you will be charged interest on the whole lot, not just the unpaid amount¹⁰. So a card that has been free for years can start costing money the first month a balance is left unpaid, and interest may be charged on the amount outstanding¹.

If you cannot pay in full every month, the card becomes a borrowing product and the interest rate matters. In that case the guides to how credit card interest is charged and to the interest-free period explain exactly when interest starts and on what it is calculated.

APR explained: what it includes and what it leaves out

Every credit card advertisement quotes an APR, the annual percentage rate, and all credit card companies have to quote one¹⁰. The APR takes into account the total cost of borrowing, including the total amount of interest you will pay, any additional charges such as a monthly fee for taking out the card, and when and how often you must pay the interest¹⁰. It is a standard way to compare borrowing products: generally, the lower the APR, the cheaper the deal¹¹.

The APR is a standardised calculation, which is what makes comparison possible. Under the regulations, the APR is calculated by an equation that equates, on an annual basis, the total present value of drawdowns with the total present value of repayments and payments of charges¹². For credit cards, the regulator's policy work describes the assumption that the credit limit is drawn down in full on the first day of the agreement and repaid in 12 equal monthly instalments with no further transactions¹³. Independent guidance gives the assumed level of borrowing as £1,200⁹.

Two features of the APR matter in practice. First, the representative APR shown in an advertisement must be an APR at or below which at least 51% of consumers entering into agreements as a result of the advertisement are expected to pay¹³. Nearly half of accepted applicants could therefore be charged more than the advertised rate. Second, the APR does not take into account charges you might have to pay, like a charge for missing your monthly repayment¹⁰. It also should not reflect the value of any cashback or similar incentive linked to the contract¹⁴.

Where the rate is subject to change, the APR must be accompanied by the word "variable"¹⁵. The full guide to credit card APR works through representative APR and what a card's headline rate really promises.

Fees and charges: annual, late payment, over-limit and foreign use

Interest is the main cost of a credit card for most people, but it is not the only one. You will usually be charged for going over your credit limit, for using the card abroad and for late payments, and the credit agreement sets out what other charges apply to the card⁶. Some providers also charge an annual fee, which is added to the amount due¹.

The main charges to look for are:

• Annual fee: some cards charge a fee each year for use of the card, added to the amount due⁶
• Late payment charges: extra charges are added if you miss payments⁵, and charges of more than £12 for missing a credit card repayment may be seen as unfair⁴
• Over-limit charges: you can be charged if you go over your credit limit⁸
• Foreign transaction fees: most credit cards add a foreign transaction fee of around 3% on non-sterling purchases and cash withdrawals¹⁶

Using a card abroad can also carry a spending or cash machine charge, typically between £1 and £3 each time you use your card, except for euros in the EU¹⁷. Before travelling, it is worth telling your card company: if the card company is suspicious about sudden unusual spending, they may freeze your card⁴. The guides to using a credit card abroad and to late payment and over-limit charges cover these costs in detail.

One charge has been abolished rather than merely capped. It is no longer legal for credit card providers to send out cheques that you can use to withdraw money or to pay for goods or services, unless you have asked them to send these cheques⁴.

Shops themselves cannot add a surcharge for consumer card payments, following the ban on card surcharges. The fee a retailer pays, known as the interchange fee, is charged by your bank to the merchant's or retailer's bank when you use your card to pay for goods or services in a shop or online, except for American Express cards¹⁸. You can still be charged extra if your bank or the seller's bank is outside the European Economic Area (EEA), and you can also still be charged if you are using a business card¹⁹. Some public bodies still apply surcharges: for student loan repayments, credit card payments will attract a surcharge²⁰. See the ban on credit card surcharges for the full rules.

0% and balance transfer deals: around 2% to move a balance

Many cards offer promotional periods during which no interest is charged, either on new purchases or on balances moved from another card. Many balance transfer deals offer 0% interest on the amount you move¹⁹. A 0% purchase card does the same for spending on the card, and a money transfer card can move money into a current account: for example, an 18-month 0% money transfer card with a limit of £2,000 could be used to request a £1,000 money transfer¹⁶.

Moving a balance is not free. Most credit card providers charge 2% to 3% of the amount you are transferring as a one-off fee⁵. Independent guidance puts the typical balance transfer fee at around 2% of the balance¹⁹, while other consumer guidance describes most cards charging a fee to transfer the balance, typically around 3%¹⁶. The fee is added to the balance, so it is borrowed too unless you pay it off straight away.

A balance transfer moves the debt, not the interest rate. The point of the exercise is to move an expensive balance onto a card charging no interest for a promotional period, so that repayments reduce the debt itself rather than servicing interest. When the promotional period ends, the remaining balance is charged at the card's standard rate, so the debt needs a plan that clears it before then. The guides to balance transfer credit cards, balance transfer fees and what happens when a 0% offer ends cover the mechanics.

Missing a payment on a 0% deal can end the offer early, so a direct debit for at least the minimum payment protects the promotional rate. The narrow guide to missing a payment on a 0% deal explains the consequences.

Cash withdrawals cost more from day one

Withdrawing cash on a credit card is treated completely differently from buying something with it. Cash withdrawals attract a withdrawal fee, as well as a higher APR, and do not enjoy the interest-free period available for purchases¹⁶. You may also be charged a cash handling fee of around 2% of the amount you withdraw¹⁹. The interest rate for cash advances is usually higher than the interest rate for purchases¹⁹.

The timing is the crucial difference. When you take cash out on a credit card, interest is added to your account straight away, even if you pay off the balance by the due date⁴. You are charged interest from the day you took the money out²¹. Cash transactions will always charge interest²¹. There is no way to use a credit card to withdraw cash without paying interest on it.

Buying foreign currency, gambling transactions and some other cash-like payments are usually treated as cash advances too, so the same charges and immediate interest can apply. If you withdraw cash on your credit card abroad, you may be charged a foreign transaction fee on top of the usual cash advance fee⁴.

For comparison, withdrawing cash on a debit card abroad typically costs between £1 and £3 each time, except for euros in the EU¹⁷, and does not involve borrowing. The guide to withdrawing cash on a credit card sets out the full cost.

Who can get a credit card and how to apply

You can apply for a credit card online, by post, by phone, or at a bank or building society⁶. Providers do not have to give you a credit card: your application may be refused if your credit score is low or you are not considered a good risk⁶. You must be 18 or older to hold one¹⁰.

Every application leaves a mark on your credit file, so if you apply and are rejected, it can affect later applications. Many providers offer a soft search eligibility check, which does not impact your credit score and gives an indication of acceptance before a full application¹⁶. Your credit file tells the provider whether you are a good payer and about any court orders you have had in the last six years⁶.

If your credit history is poor, a credit-builder card is one option. These tend to have a low and grow approach, whereby your initial credit limit is very low, say £100 to £200, but increases as you prove you can manage it responsibly¹⁶. If you cannot pay the balance in full, make sure you make the minimum payments, and setting the balance to be paid in full each month is the cheapest way to use one²².

Credit cards cannot be taken out in joint names²³. One person is the main cardholder and is responsible for paying off the credit card debt in full²³. An additional cardholder can get their own card and shares the credit limit, but has no legal responsibility to pay towards the debt²³, and the main cardholder is responsible for paying off whatever the additional cardholder spends⁶. If cards are held jointly, any debts will be the joint holder's responsibility when someone dies²⁴.

A joint bank account is a different product: it normally allows two or more people to receive payments, pay by debit card, transfer money and manage the account, depending on the bank²⁵. Only consider opening a joint bank account with someone you trust, as it could damage your credit score if the other person has poor credit, and you could be responsible if they run up debt²⁶. Closing a joint account will not remove the link to the other person from your credit file, though a notice of disassociation can be requested from credit reference agencies if there is no other financial connection²⁵.

The guides to applying for a credit card, credit-builder cards and additional cardholders cover each of these routes.

Minimum repayments and how long debt can last

If you do not pay off the balance each month, you will be asked to repay a minimum amount. This is typically around 3% of the balance due or £5, whichever is higher⁶. The regulator sets a floor for cards and store cards taken out on or after 1 April 2011: the minimum repayment must be at least the amount which repays the interest, fees and charges applied to the account, plus one percentage of the amount outstanding²⁷.

The minimum is designed to keep the account in good order, not to clear the debt. Making minimum payments could mean you end up paying the debt over a long time⁵. The regulator's own research put a figure on it: a balance of £1,000 would take 18 years and 9 months to repay with the minimum payment²⁸. Because the minimum is a percentage of the balance, it shrinks as the balance falls, so each month less of the payment goes towards the debt itself.

Your credit card company should contact you to warn you of what might happen if you only make minimum payments⁴. Statements also carry a standard warning showing how long clearing the balance at the minimum would take.

One further rule shapes how repayments land. The most expensive debt on your credit card will always be paid off first⁴. So if a card carries a 0% balance transfer alongside purchases attracting interest, payments reduce the expensive part first, and the cheap part sits untouched accruing nothing but waiting.

Paying a fixed amount each month rather than the shrinking minimum clears a balance far sooner. The comparison guide to minimum payment or fixed amount shows the difference, and ways to clear card debt sooner lists the practical options.

Persistent debt: what happens after 18 and 36 months

Persistent debt is when you have been paying more in interest and charges than towards what you owe for 18 months or more²¹. Since September 2018, the Financial Conduct Authority (FCA) has required lenders to contact customers who fall into this pattern²⁹. The rules only applied to credit cards at first, but now apply to store cards and catalogues too²⁹. Providers must tell you if your account is in persistent debt⁷, and this advice applies across the UK⁷.

The rules work in two stages. After 18 months of persistent debt, the provider must contact you and ask you to take action to stop being in persistent debt by month 36³⁰. After 36 months, the provider should offer you a way to pay, which should take within three to four years³⁰. The options at that point may include an affordable payment plan to clear the debt quicker, or paying off the debt with a loan or credit card; the provider may also consider pausing interest and charges, reducing your minimum payment, or suspending your account³⁰. Your lender could suspend your card if you are in persistent debt for 36 months or more⁷.

The purpose of the rules is to stop customers paying more in interest and charges than they owe, indefinitely. Being contacted at 18 months is a prompt to change the repayment pattern while the debt is still manageable. The measures a provider may take at 36 months, such as pausing interest and charges, reducing the minimum payment or suspending the account, could impact your credit file³⁰.

If paying more is not affordable, the provider still has to work with what you can pay. The guides to the persistent debt rules, persistent debt suspension and forbearance rights when you cannot afford higher repayments set out where you stand.

Section 75 protection: purchases from £100 to £30,000

Section 75 of the Consumer Credit Act 1974 is the strongest consumer protection attached to any payment method. It makes the card provider as responsible as the trader for a breach of contract or a misrepresentation³¹. In practice, if you pay by credit card for something that never arrives, is faulty, is not as described, or the trader goes bust, you can claim the money back from the card company directly, without having to chase the trader.

The protection applies to items costing more than £100 and less than £30,000³². MoneyHelper describes the range as £100 to £30,000, and notes it applies even if you are only paying some of that amount on your credit card². So a £600 item paid half on the card and half in cash is still covered in full, because the card transaction and the purchase are linked.

The legal basis is section 75 of the Consumer Credit Act 1974, headed "Liability of creditor for breaches by supplier"³³, which came into operation on 1 July 1977³⁴. The claim is made by contacting your bank or credit card provider to see if you could make a Section 75 claim³⁵. The Financial Ombudsman Service has published case studies of customers recovering money from their card provider after a travel company stopped trading, explaining that the customer could contact their bank or credit card provider³⁵.

The protection extends to traders overseas and items bought when abroad³⁶, so it covers online purchases from foreign sellers and things bought on holiday, not just UK high street shopping. The step-by-step guide to making a Section 75 claim covers the process, and Section 75 protection explains the right in full.

Where Section 75 does not apply

Section 75 has hard edges. It does not apply to charge cards or debit cards³⁷, because the legal right is tied to credit agreements. It does not apply to items costing under £100³⁸, and it stops at £30,000³². A debit card purchase can sometimes be recovered instead through chargeback, which is a card scheme rule rather than a legal right, but it is discretionary and has no statutory floor.

The way a payment is structured can also break the link between the card and the purchase. The Financial Ombudsman Service notes that section 75 might not apply if the customer has used a credit card to put funds into a standard e-money account and then used that account to buy something³⁹. In that chain, the card was used to top up a wallet rather than to buy the goods, so the card provider's liability may not reach the final purchase. Paying by PayPal can raise similar questions, covered in PayPal and Section 75.

The rules are extending to one new area. Buy Now Pay Later agreements made from 15 July 2026 onwards will be covered, making the BNPL provider and the retailer jointly responsible if goods do not arrive, are faulty, or the retailer stops trading, with the same £100 to £30,000 range applying³⁸. Older BNPL agreements are not covered.

For anything outside Section 75, chargeback is the fallback. The comparison guide Section 75 or chargeback explains which to use, and when Section 75 does not protect you lists the exclusions in full.

Who provides credit cards in the UK

You can get a credit card from banks, finance companies and larger supermarket and store chains¹. The high street banks, building societies, and the credit arms of retailers and supermarkets all issue cards, often under brand names better known than the licensed firm behind them. The guide to UK lenders and card issuers lists who issues what, and who issues your credit card explains the brand and licence relationship.

One point worth knowing when a provider offers both cards and savings: deposit protection is shared across brands that hold one banking licence. For example, NS&I's complaints data groups banking and credit cards together⁴¹, and among banks, eligible deposits held with HSBC UK, HSBC Private Bank, first direct, M&S Bank and M&S Savings and Investments count together towards one £120,000 protection limit⁴². Money spread across brands sharing one licence counts once towards that limit.

Store cards are a related product offered by retailers. Unless you plan on paying off the full balance straight away, they can often work out to be twice as expensive as credit cards¹⁰. The guide to store cards and retailer credit compares them.

Complaints and where to get help

Credit cards generate a large volume of complaints to the Financial Ombudsman Service. In 2025/26, credit cards were the third most complained about product, with around 22,800 complaints⁴³. In the first quarter of 2025/26 alone, 6,600 new complaints about credit cards were opened⁴⁴, and in the first quarter of 2026/27, 5,783 were opened, alongside 757 about debit cards, 129 about store card accounts, 228 about credit records and 33 about credit broking⁴⁵. Of the credit card complaints closed in Q1 2025/26, 25% were upheld in the consumer's favour⁴⁴.

The complaint route is fixed. First complain to the card provider, which has eight weeks to respond. If you are not satisfied, take the complaint to the Financial Ombudsman Service, which is free. In Northern Ireland, Consumerline can refer your complaint to the Trading Standards Service for investigation or to the Financial Conduct Authority, which authorises lenders¹¹.

If the problem is debt rather than a dispute, free help exists. StepChange, National Debtline and Citizens Advice all provide free debt advice, and MoneyHelper offers free guidance on banking and borrowing. Certain types of borrowing, such as overdrafts, revolving credit on your credit card and payday loans, charge higher interest³, so card debt is worth addressing early rather than after charges have built up. The guides to help with credit card debt, debt in Scotland and debt in Northern Ireland cover the options, and the wider debt guide covers every solution from informal plans to insolvency.