How do credit cards work?

Credit cards allow you to buy items both online and in-store, as well as being able to withdraw money from a cash machine – although this often comes with a fee. When you apply for a credit card, you’ll be offered a limit, and you’ll be able to keep spending until this limit is used.

Every month, your card provider will send you a statement – generally via post or your online account, depending on which you opt for – and this will inform you of your current credit card balance and the amount required to clear the debt. Your card provider will request a minimum payment amount, although do be advised that if you only make the minimum payment, rather than increased payments or paying the balance in full, you may be subject to interest charges on the remaining balance.

When it comes to understanding charges, interest and late payment fees, these will differ depending on the credit card you choose – so do your research and make sure you fully understand the terms, conditions and any other small print before you apply.

Should I get a credit card?

A credit card can be a useful option if you’re trying to build a credit score and have previously not taken out credit. Using a credit card for purchases throughout the month and then paying your balance off in full each month will help to build your credit profile and show future lenders that you’re able to manage your finances and repayments. 

Remember, your credit history will be reviewed when you apply and this will help providers decide whether or not you’re a suitable candidate for a credit card. Tools like Experian will allow you to understand your credit history and score before you apply and you can opt for the free version or pay a monthly fee to receive a more detailed report of your credit past and present. 

There are also credit cards available for people with bad credit, although these often come with much lower spending limits. If you’ve previously been refused credit, continuously applying could make your credit score worse, but some providers will show you how likely you are to get approved before you apply. This is a worthwhile exercise, as you’ll be able to decide whether it’s worth applying based on the likelihood of approval. 

Pros and cons of credit cards

There are pros and cons of getting a credit card, and it’s important you understand these before you decide to apply – ensuring that the pros outweigh the cons for your specific situation. You’ll find some pros and cons listed below.*


  • Build/improve credit score
  • Cash back, rewards & discounts 
  • Improve your credit score 
  • Theft protection


  • High interest rates
  • Late payment fees
  • Temptation to overspend
  • Cash advance fees

Applying for a credit card

If you’ve decided that you want to apply for a credit card, the first thing you should do is shop around for the best deals for your financial situation and needs. There’s a wealth of information available online, but it’s advisable to visit more than one source to ensure the information you’re reading is accurate.

Once you’ve found a credit card you think might work for you, spend some time weighing up the repayments before you apply, ensuring that you’ll be able to afford the minimum repayment amount each month. If at any point you feel worried about being able to meet the repayments, we’d suggest that a credit card might not be the solution for you and you may want to explore other borrowing options – view our brief guide to loan types on our homepage.

Paying off your credit card

If you’re serious about debt management and keeping your outgoings to a minimum, we’d recommend only spending what you can afford to repay in full in any given month. Although these will differ depending on the provider of your credit card, you’ll be faced with charges and fees if you’re unable to pay off the balance in full or miss a payment. If you’re enjoying an interest-free period and this is coming to an end, it’s well worth looking into your balance transfer credit card options. This type of credit card often comes with a 0% interest offer and means you’ll be able off your existing credit card, transfer the balance to your new card and enjoy an extended payback period without the interest rates.

For more help, guidance and financial tips, head over to the Jolly Good Loans blog, where you’ll find further insight into managing your finances, credit score and more. Remember, if you find yourself under financial pressure, there is help available – visit the Citizens Advice website here or call the free national debt helpline on 0808 808 4000.

*See your credit card provider’s website to find out more about their specific offers