Guide To UK Credit Cards For New Residents

Guide To UK Credit Cards For New Residents

Credit cards are widely used in the UK, and they’re generally a safer bet than getting a payday loan if you have low credit. So getting a UK credit card as a new resident can help you build credit and give you extra financial support.

But credit cards aren’t always easy to get. You’ll need to make sure you’re eligible for a credit card before you apply to avoid harming your UK credit score.

This guide to UK credit cards for new residents will help you navigate the eligibility criteria for most UK credit cards, plus offer ways to improve the chances of a successful credit card application.

Should you get a UK credit card as a new resident?

Credit cards can be useful, especially for making high-cost purchases. Credit card purchase protection helps you get your money back if a product is faulty, broken, or doesn’t arrive.

But credit cards are also a type of debt, and the interest rates can quickly spiral out of control if you don’t pay off your credit card on time. So it’s important to consider the pros and cons of getting a credit card as a new resident:

Advantages of a credit card

  • Credit boost — Using a credit card responsibly (i.e. paying off your debts on time) can give your credit rating a boost, which is important if you need a credit score in the UK. Some credit builder cards are issued specifically for this purpose.
  • Purchase protection — Credit card providers share liability with the seller for items or services that cost £100 to £30,000, giving you extra insurance when you buy something expensive.
  • Interest-free options — Some credit cards offer a time-limited 0% interest rate if you make your minimum monthly repayments on time.
  • Buy now, pay later — You can make urgent purchases upfront, then pay off your credit card at a later date.
  • Reward schemes — Some providers give you incentives to use the credit card, such as air miles, cashback, and loyalty points.

Disadvantages of a credit card

  • Potential debt increases — Credit cards incur debt. If you can’t make your minimum monthly payments, you’ll start to incur interest, which can quickly get out of control.
  • Credit score problems — Just as paying off your credit card on time can build a good credit score, not paying it off can damage it.
  • Hidden fees — Some credit card providers charge extra fees for certain actions, such as going over your credit limit or missing a repayment.
  • More expensive cash withdrawal — Unlike a debit card, you’ll often be charged to withdraw cash from an ATM if you use a credit card.

Are you eligible for a credit card?

If you’ve decided a credit card is the right path for you, the next step is to find out whether you’re eligible.

Here are the standard eligibility criteria for getting a credit card in the UK:

  • You must be at least 18 years old.
  • You must have a permanent UK address.
  • You must live in the UK.
  • You must earn a certain amount of money (the exact amount depends on the credit card you want).

These are the most basic criteria for getting a credit card. Even if you meet them all, your application isn’t guaranteed to be successful. It also depends on your credit score, your ability to prove you’re a trustworthy borrower, and other factors.

How to get a credit card if you’re new to the UK

Applying for a credit card is easy, but it shouldn’t be done lightly. Applying for a credit card will leave a mark on your credit file that can impact your credit rating, especially if you’re rejected.

So you need to check you meet the individual eligibility criteria (including credit ratings) for any credit card before you apply.

You can use a credit card eligibility checker to see if you’re likely to get accepted without affecting your credit score.

Credit builder cards: what are they and should I get one?

Some credit cards are specifically designed for people who don’t have a credit score, which is often the case for new UK residents. They can help you build a good credit rating, as long as you stick within your credit limit and pay them off on time. These cards are known as credit builder cards.

Credit builder cards typically have low credit limits and high interest rates. That means if you miss a payment, your debt can grow quickly. So it’s still important to make sure you can pay them off before you get one.

Some credit builder cards allow you to check whether you’ll be accepted before you apply. This reduces the risk of leaving a mark on your credit file.

What happens if I’m rejected for a credit card?

If your credit card application is unsuccessful, it may have an impact on your credit score. So it’s important you don’t keep applying if you’ve been rejected once.

Instead, take action to fix your credit score without a credit card. By building up your credit score using these tips, it’s more likely you’ll be accepted when you next come to apply.

1. Get a permanent address

Staying in temporary accommodation? Try to move to a fixed address as soon as you can. Having a permanent UK address shows credit card providers that you have stability and regular income.

Not only that, it’s a prerequisite for most credit card applications, so this is an important step. Find out how to rent a house with a low credit score.

2. Open a bank account

Some overseas banks also have branches in the UK, so you may be able to open a UK account and transfer your money with the same bank.

If your existing bank doesn’t have UK branches, you’ll need to open a new account here anyway. You can do this online, or in-person at a high street bank.

Most banks require proof of address and ID. However, some digital-only banks will let you open an account without proof of address.

3. Pay your bills on time

Moving into your own place also means you can set up household bills in your name. Paying your bills on time is another way to show credit card providers that you’re reliable with money.

If you have a UK bank account, you can set up a direct debit to make sure all your bills are paid on time.

4. Aim to get regular income

Get a stable job with regular income as soon as you can. Try to avoid getting paid in cash; instead, have your employer transfer your earnings to your bank account. This will help make sure you have enough money in your account to pay your direct debits.

What happens if my credit card application is successful?

Congratulations! You can start using your credit card to build up your UK credit score.

That said, it’s a good idea to know how to use a credit card responsibly, especially if you’ve never had one before. Here are some tips to keep your credit score high and stop debt building up:

  • Know your credit limit — Make sure you know exactly how much you have available on your credit card, including how much you’ve spent and paid off. Most credit cards have apps that allow you to access this information easily.
  • Pay off your debt as soon as you can — Ideally, you’ll pay off all your credit card debt every month. If this isn’t feasible, you must make sure you can afford your minimum monthly repayments.
  • Make your minimum monthly repayments — Don’t apply for credit cards with high repayments you can’t afford. This can quickly cause debt to mount up.
  • Don’t use your credit card to withdraw cash — Cash withdrawals from credit cards often incur fees, so use a debit card to withdraw cash instead (these are usually fee-free).
  • Use a credit card for larger purchases — Purchase protection kicks in when you pay £100 or more for a single product, so try to reserve your credit card for larger one-off purchases, rather than lots of little ones.

Learn more about about making and saving money in the UK

At Bloom, it’s our mission to make sure new UK residents have the right financial information to help them thrive in their new home. Head to the Bloom Learning Hub to find out more about making and saving money for you and your family in the UK.

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