The best first time credit cards for UK beginners in 2021
hi i’m andy welcome to my channel in this video today i want to talk to you about the best credit cards for beginners people who don’t have a credit card haven’t had a credit card before uh how to get them essentially started with a credit card now you might be thinking hang on right credit cards are bad right they shouldn’t be you shouldn’t be getting one of these if you don’t need one well if you don’t manage a credit card properly like with any debt then yeah they are bad for you but if you can manage them sensibly and manage them in a way that’s not going to cost you money then they actually do have a number of uses so you can get extra consumer protection with them you can get potentially cash back or rewards with them and you can even use them perhaps to borrow at naught percent so essentially very very cheap borrowing for something that’s quite expensive but you can’t afford it right now but you know you can if you spread that cost out over a certain amount of time all very very good things that credit cards give us but if you are starting off from scratch they’re further away right they’re in the future they’re not right now the reason to get a credit card your first credit card the reason to start off with one is because they actually can help you with your credit report and your credit score now i’ve got other content you can look at explains why credits reports are so important how to check them for free but very very quickly having a strong credit report which is reflected in the credit score means that as you sort of want to borrow more money things like a mortgage perhaps you do want to look at those other credit cards that i mentioned the cash back credit cards you might even when you are switching your mobile phone bill or your energy all of those things all those applications for that credit for that borrowing they go to your credit report and they look at you they look at all sorts of things right but one of the things they look at is how responsible you are when you’ve borrowed previously now if you’ve never borrowed any money before if you’ve never had any credit in any form there’s nothing to look at and this is what’s known as a thin credit report a thin credit file there’s no history for them to look at so you want to build that up and there are a number of ways you can do that so this isn’t the only one but one of the things that really can help you once you’ve done the basics such as you know registering for voting opening a bank account checking your address history and all that kind of stuff on there once you’ve done those basic things actually having a credit card using it every single month and paying it off completely every single month actually will help you demonstrate that you can borrow money that you have got that sense that you understand how to borrow money and how to pay it back without getting into debt so if you are thinking about getting a credit card for the first time i would say the reason to do it is not because you need access to cash it’s not because you want to earn rewards it’s not because you want any of the other things it’s because you want to improve your credit report so that’s what i’m going to focus on in this video today the best credit building best first time credit cards for you in 2021. now before we get into those cards a few basics on credit cards because they’re assuming here again this is your first time really looking at credit cards well first of all that money isn’t free it’s called credit it is borrowing money okay so sometimes you get those letters through the post don’t you or those emails the first time soon as you hit 18 it’s like hey look we’re giving you this card with all this money for you to spend go go ahead go for it it’s not free money which sometimes people think you are borrowing money from that credit card provider to spend and you will have to pay it back to them and also they will charge you for that they will charge you an interest rate an apr now this could be anywhere between let’s say 20 and 60 it really can vary depending not just on the cards you apply for but also on your credit history the better your credit uh report the better evidence you’ve got in there the lower the rate that you’ll generally get now when you see these cards advertised this apr often is a representative apr and that means even if it says you know 35 you might not get that 35 percent because only 51 of successful applicants have to get that advertised rate with a lot of the cards so you might find that you get something that’s a lot higher some of them don’t some of them will give you that rate and you can find that information out when you look into the details before applying but that’s something to be aware of now when you’re starting off with one of these cards for the first time although i will tell you about the interest rates that are there and you have to know about them i don’t want you to pay them at all i don’t want you to get charged interest because if you’re doing that then you’re getting yourself into that and this is costing you money this is about very very simply using them for a few small purchases and clearing it completely so you don’t get charged interest but you do need to know that interest rate is there and what it would be if you don’t pay that money you’d also find when you first get that credit card the same for any credit card you get there’s something called a credit limit and this is the most that you can borrow on that credit card now the more advanced cards you could be looking at thousands of pounds but from these credit builder cards that we look at today you could be looking at as low as 50 quid maybe most at 500 600 pounds when you’re starting off you know it’s not going to be a huge amount of cash now some important things here with that credit limit obviously there’s a limit means you can’t spend more than that but sometimes you can exceed it right if you do that that’s not great for your credit score so avoid doing that make sure you don’t go towards that limit in fact it’s probably best if you go to about 30 of that limit so let’s say you’ve got a hundred pound credit limit it’s a small one but it’s an easy one for the maths here that means you never really want to have more than 30 pounds spent on that card at any time this is down to something called credit utilization okay and it’s that essentially this look at this 30 percent limit suggest that you are again comfortable with debt you’re not desperate for debt you’re not borrowing more than you need to you’re not going to get into that bit where it could become a problem because you borrowed too much money so try and keep that and say that credit utilization limit down as much as you can now when it comes to using them for this purpose of building up your credit score you don’t actually have to spend too much money it’s about just demonstrating that you are comfortable doing this so personally what i would do with them is i would maybe go look right once a month won my supermarket shop i’ll do that spend and that is all i would put on it for that month that you know 50 quid 100 whatever it is obviously you know what your credit limit will be when you get that card if you’ve only got a 50 credit limit then that’s going to be quite difficult to sort of do anything more than that but do that and then you need to pay it off completely okay now you can do that straight away if you want because soon as you’ve made that purchase you can go to your app or your online banking whatever it might be transfer that money straight to that card you can you don’t have to wait you can do it immediately and that could be quite handy if you’re not so sure about budgeting and making sure that the money that you’ve got in your account isn’t going to get eaten up elsewhere so you can do that straight away or if you want to make sure you don’t forget you can set up a direct debit and this will automatically move the money over on the same day every single month now you can set this for a few different things it could be the minimum repayment because that’s something that all these cars will require is a minimum repayment every single month if you don’t make that minimum then you will be hit with some charges and some fees so you want to avoid that completely it’s also not great for your credit report it will go down as a default if you miss your payments so make sure you have at least the minimum set up but what i would do again because it’s so important to make sure you clear it completely and don’t get charged interest is set it for the full amount so that’s two options i will pay it straight away or have a direct debit every single month for the full amount and that will clear that completely and that together those things combined will mean that you are demonstrating to the credit reference agencies with their credit reports that you are able to responsibly borrow money and that will help you as i say longer term with any other applications for other forms of borrowing such as the mortgage rewards credit cards loans any of that kind of stuff now before we get into my pick of some of the cards you might want to look at i do want to quickly touch on the application process because you could if you wanted just go to the credit card company’s website click apply and see what happens but if you do that in most cases there’s a chance you might get rejected and if you get rejected for this card that is going to be a negative mark essentially on your credit report that will reduce your credit score and make it more difficult for you to borrow again in the future so you want to avoid that what i would always do is something called a pre-eligibility check now sometimes the credit card companies do have this on their website so look for that make sure you do that first of all but i think better than that is to go by a comparison site my pick actually would be money saving experts credit club now and what you can do there you put all your details in and they will actually give you a long list of different cards and the different sort of chances of acceptance on a load of different cards because it might be that one of the ones i tell you about right now maybe you’ll only get a six out of ten chance of getting it which hey six out of ten isn’t too bad but there could be another card that i don’t talk about but doesn’t necessarily have some of the little extra features that i speak about now but it’s perfectly good for what you want it for here in terms of just buying something once a month and clearing it every month to show that evidence that you can be responsible with credit but that might give you nine out of ten it might give you ten out of ten and that’s far more important than some of the extra features right now so i would absolutely do that so i recommend the credit club for money saving expert that also links through to your experian credit report as well so you can see that see the information there so it’s really well worth checking it out in fact you might even find there are other credit cards that you can get beyond these credit building ones maybe some of the ones which will give you uh money back on your purchases or extras or longer naught percent periods so it’s worth doing that so let’s have a look at my pick of some of the best credit rebuilding and credit building cards out there the first one i’m gonna go for is the amazon classic credit card although i’m not the hugest fan of amazon itself in terms of a starting off credit card it’s not bad for a few reasons first of all if you’re successful you’ll get a 10 pound amazon voucher so it’s a little bit of a nice freebie for you to spend on amazon but also there are a few other extra things so for example you will get a 500 pound credit limit that’s a lot higher than you’ll get with a lot of the other first-time credit cards now again that shouldn’t be something to achieve for it’s not a target like i said but it does give you a little bit more flexibility and if we’re talking about remember that 30 credit utilization limit it means really you’d be looking to spend 150 pounds no more than 150 pounds a month on that before it is cleared so i think that’s not not a bad starting point the interest rate is also not too bad compared to the others 29.9 again though i’d really encourage you to avoid paying interest at all so i’m not going to focus too much on the interest rates here but it’s just so you have that information a couple other things you do get naught percent interest for the first three months so if there is something that you are looking to buy that’s quite expensive right now and you do know you can afford it over three months just by splitting it out it’s a much better option than something like clarner i would say as long as you do clear it completely by the end of that three month period and you will have to make those minimum repayments in those three months set at five pounds for the amazon card and also what’s interesting here is if you stay within your credit limit and make payments completely every single month for a whole year they’ll upgrade you to the amazon platinum credit card at the start of the first start the second year and with that you can earn cash back reward points on amazon purchases and elsewhere so it’s a nice kind of sort of gateway to get yourself onto that kind of reward side of things uh where with other cards it might take you a lot longer to get accepted next up i’ve got the tesco foundation credit card this one has an apr of 27.5 percent so a little bit less than the amazon car but again hopefully that’s not relevant i don’t want you to be paying interest on these cards at all now the credit limit here could be uh 200 pounds starts at 200 quid goes up to 1500 pounds i think it’s quite unlikely as a first timer you’ll get anywhere near that 1500 pound mark you’re much more likely to be down the lower end of things it also has a minimum repayment of 25 pounds every single month but again hopefully that wouldn’t be a problem for you if this is about you just clearing it completely but just bear in mind that that’s a a lot more along as you’ve got obviously you haven’t got 25 quid on there if you only got 20 quid then you pay 20 quid but if you’ve got 100 quid you have to pay at least 25 quid every single month on that um it does have a minimum income level of 5 000 pounds on this one you will find that most these do have some sort of minimum income level on there as well so if you don’t earning anything at all then that could be a problem for you now the other reasons worth mentioning this tesco foundation credit card is because you can earn some club card points with it and it’s the only entry level uh reward credit card out there for people starting off so you might want to look at it you’re not going to earn a huge amount with this but if you want to earn a little bit it’s worth considering most of these are going to be at tesco so for every four pounds you spend at tesco it has to be multiples of four pounds so you don’t get if you spend four pounds uh you’ll get one club card point if you spend eight pounds you get two club card points extra if you spent in between that anywhere between four and eight say six pounds just did only get that one extra club card point which is works out an extra sort of 0.25 if it was cash back in points now this is in addition to what you’d get with your normal club card points which is one point per pound spend but again a little bit extra when you spend at tesco and if you do your regular shopping there that’s not a bad thing to look at um you also get one point for every eight pounds that you spend in other retailers now that’s not much at all that’s 0.125 effectively so if you spent uh 100 pounds a month over a year you’d get one pound 50. not not the most amount of cash again that’s considering you multiples of eight pounds as well so you’re not really going to get a huge amount of money back from this in club card points if you collect your club card points anyway then as tesco say was it every little helps that tesca is tesco isn’t it now there really are so many of these credit building cards out there so i would as i said i would recommend that you do go via those comparison sites to have a look at your highest chance of getting accepted but another interesting one to share with you is the barclay card forward card and this has a much higher starting interest rate than his other two 33.9 your credit limit again could be as small as 50 quid could go up to 1200 but again you’re probably more likely to get near that 50 quid mark has a minimum five pounds a month minimum repayment and you have a minimum income level to get this of 3 000 pounds the main reason i’m telling you about this one again if we’re looking at this as an ongoing process about building up your credit score but you are worried about the interest rate that you will pay if you stay within your credit limit throughout the whole year uh you will get a three percent interest reduction at the end of year one and after the second year a two percent rate in reduction at the end of uh that second year so essentially you are going to sort of again bring down uh that interest rate that you will be paying over time now again mix and match you might be able to find you get a lower interest rate than that off the bat so it’s one but it’s one to to bear in mind again we’ll talk about this as a responsible thing but if you do think you might have to pay interest occasionally you do want to focus on that rate you also with this one will get naught purchases for the first three months so again if there’s something you need to buy that might help you spread that cost out over a short period of time again do check out those comparison sites for all the other cards that are out there quickly want to mention a couple of credit cards if you’re a student again you’re starting off and you want to again build your credit report while you have a student account with either natwest.hsbc then you can also get access to one of their student credit cards so do check those out again relatively small credit limits on these but the interest rate actually compared to the other start-off cards is a much lower one about 18 19 something like that but again i really i know i keep saying this but i don’t want you to be paying the interest on this at all this is just about buying something you would normally spend normally buy that money then clearing it either straight away or with a direct debit so you don’t get charged the interest but you are improving your credit score you’re strengthening that credit report to help you you know in a few years time now if you found this useful please do hit like leave me a comment let me know what you think and i would love it as well if you subscribe to the channel every single month i will give you an update on the top credit cards across the board all the different ones because obviously these are the best ones right now that will change over time new ones might appear some of these might disappear so if you want to check out the latest updates on the best credit cards including the best uh starting off cards credit rebuilding cards then make sure you do not only hit subscribe but hit that notification bell until next time cheers and here are a couple more videos you might find interesting you