Your first credit card

Getting your first credit card is a big step and a new responsibility, but this guide should help you to understand the basics before you apply.

1. Understanding credit cards

What is a credit card?

A credit card gives you the option to borrow money which you’ll need to pay back later.

There are credit cards designed for transferring existing balances, transferring money to a current account or to help cardholders earn rewards. But, as a first-time credit card customer, you may just need a card to help you spread the cost of large purchases, whether planned or unexpected.

A credit card is also handy to have as a back-up for emergencies, or to help you to manage everyday spending.

Consider your options

Before making any credit commitments, it’s useful to ask yourself: 

  • Does this option suit my borrowing needs, or should I consider alternatives, such as a loan or car finance? 
  • Will I be able to make repayments, even if my circumstances change?

Common credit card types

When choosing your first credit card, it’s useful to understand how credit cards work and what options are available.

  • Whether you’re planning a larger purchase, need a card for everyday spending, or just for emergencies, a credit card offers flexibility and the option to spread costs over a number of months when you need to.

    Just bear in mind, unless a 0% p.a. promotional rate for purchases applies, to avoid paying interest on purchases you need to pay off your monthly statement balance in full every month.

    Make sure you read through the interest rate information carefully. You may have a number of days from the date your account is opened to take advantage of any introductory interest rates on card purchases – usually around 60 days. After that, and when introductory interest rates expire, your standard interest rates will apply. You may be offered further promotional interest rates in future though.

    When an application is approved, your PIN will be delivered by post within 5 working days. Your new card will follow, arriving within 7 working days. You’ll need both of these before you can make in-store purchases.

  • If you have a low credit score, perhaps because you have a limited credit history, you may consider a ‘credit builder’ card.

    Although they usually offer lower credit limits and higher interest rates, by using a credit builder card and making repayments responsibly, over time it could help to improve your credit score. Eventually, you may be able to switch to a credit card offering lower and longer lasting interest rates.

  • With a balance transfer you could move existing credit and some store card balances held elsewhere, to a single credit card. With everything in one place, your outgoings should be easier to manage. Just be aware that transfer fees may apply. At Lloyds Bank, you can request a balance transfer from most credit cards and store cards which display the Mastercard®, American Express®, or Visa® logos, but not from loan companies, bank accounts or other Lloyds Bank credit cards. 

    If you’ve never had a credit card before, but you do hold balances on store cards, a balance transfer could still be useful. 

    Just bear in mind that you’ll have a number of days from the date your account is opened to take advantage of any introductory interest rates on balance transfers – usually around 60 days. After that, and when introductory interest rates expire, your standard interest rates will apply. You may be offered further promotional interest rates in future though.

    At Lloyds Bank you can request balance transfers as part of your application, or afterwards if you prefer. 

    More about balance transfers

  • If the option is available, with a money transfer you could move funds to your UK current account, helping you to spread the cost of unexpected bills, or for cash only purchases.

    Just be aware that transfer fees may apply.

    It’s important to know, if you make a purchase using money transferred from your credit card to your current account, the purchase will not be protected under Section 75 of the Consumer Credit Act 1974 – unlike some credit card purchases.

    You’ll have a number of days from the date your account is opened to take advantage of any introductory interest rates on money transfers – usually around 60 days. After that, and when introductory interest rates expire, your standard interest rates will apply. You may be offered further promotional interest rates in future though.

    At Lloyds Bank, money transfers are only available on selected products and when your account is set up.

    More about money transfers

  • Rewards – you may see credit cards which offer points or cashback when you spend.

    Credit cards offering rewards may have associated fees, e.g. an annual fee. These details should be outlined in the credit card features before you apply.

    Do some calculations, based on your planned spending, to see if the benefit is worth the fee.

    Low rates – some credit cards are offered with lower than average standard interest rates, rather than 0% introductory interest rates which expire after a fixed period.

    Although you’ll be paying interest from the start, there usually aren’t limits on when you transact, and the interest rates and costs may be easier to keep track of.

Things to look out for

When comparing credit cards with different interest rates and benefits, consider the following:

  • This could help you estimate how much your credit card borrowing will cost over the course of a year. 

    A representative example is provided to show the typical costs if you borrowed £1,200, based on the card purchase interest rate only. It’s useful to know that this doesn’t factor introductory interest rates or all transaction fees so your actual costs could vary, depending how you use and manage your new credit card. 

    More about APRs

  • The lowest and longest lasting introductory interest rates are usually offered on one primary transaction type, e.g. card purchases, so think about the main reason you need a credit card before you start looking.

    You might notice that the duration of some introductory interest rates is advertised as being available for ‘up to’ a certain number of months. That means you could be offered a shorter duration instead, based on an assessment of your personal circumstances and credit history. 

    More about introductory interest rates

  • As a first-time credit card customer, you may not be offered a large credit limit to start with. Again, this is based on an assessment of your personal circumstances, including any credit history. 

    If you use your card, stay within your credit limit and repay your balance responsibly for a period of months, you could apply to increase your credit limit in future. Lenders may also offer you a credit limit increase if they see that you’re managing your account well. 

    More about credit card limits

  • In addition to interest, there are other things which can contribute to the cost of borrowing. Fees may apply to some transactions and account features, including balance and money transfers, cash transactions, non-Sterling transactions and annual fees.

    Additional charges may apply if you don’t manage your account in line with the conditions set out in your credit agreement, for instance, if you miss payments.

    More about fees and charges

2. Check your credit eligibility

Are you eligible?

All lenders set basic criteria potential customers need to meet.

 

To be accepted for a Lloyds Bank credit card, you must:

  • Be a UK resident, aged 18 or over, with a regular annual income.
  • Be free from County Court Judgements (CCJs), Individual Voluntary Agreements (IVAs) and bankruptcy.
  • Not be a student or unemployed.
  • Not have been declined for a Lloyds Bank credit card within the last 30 days.

 

 

When you apply, you’ll need to provide:

  • At least 3 years’ UK address history. 
  • An email address and phone number. 
  • Your main bank account number and sort code.

Lending decisions are based on a number of factors

Your credit record

Your credit record

Credit reference agencies securely hold information about you and your financial past, issuing you a credit score. Lenders can access this information to support their decisions around offering credit.

Affordability

Affordability

Lenders also consider what you can reasonably and sustainably afford to repay, based on things like your income and the total amount of credit that’s already available to you.

Current and past accounts

Current and past accounts

Lenders usually hold a record of accounts you’ve held with them before, including information about how well they were managed.

A low credit score could lower your options

In addition to the details provided in your application, lenders access information from and the score issued by independent credit reference agencies. 

If you’ve never had, or have very limited experience with credit, it’s likely you’ll have a lower credit score, so lenders will find it difficult to assess how well you’ll manage it. In turn, you may be less likely to get the lowest and longest lasting interest rates, or be approved for credit at all. 

It’s a good idea, especially if you’re planning to apply for credit, to check that the details held by each credit reference agency is accurate. If it’s not, you could apply to have the information corrected. 

You may also have some work to do if you want to improve your credit score and eligibility in future.

More about credit scores

Improving your credit score

It may take some time, but there are things you can do to kick-start your credit profile:

  • Carefully manage commitments – keeping up with payments on store cards, services like your mobile phone or TV subscriptions, and other household bills, could all help to boost your credit score. You’ll need at least 1 account offering you credit of some description, for a period of 6 months or more, to generate a credit score you can build upon. 
  • Use a bank account – setting up Direct Debits to make regular payments, e.g. for things like utility bills, can contribute to your credit score over time. Just make sure there’s money in your account to cover any payments, or you could find your credit score is negatively rather than positively affected. If your account has an overdraft, managing that effectively will also help. 
  • Register to vote – not only will it allow you to exercise your right to vote, being on the electoral roll is one way your home address can be validated, which in turn can help to improve your credit score and eligibility. 
  • Joint accounts count – joint financial commitments, like bank accounts, mortgages and even utility bills, create a link between you and your partner. Even if the joint accounts themselves are managed well, if your partner’s credit score is low for another reason, that could impact you and your ability to get credit. It’s worth working to improve both of your individual credit scores, or trying to keep your finances separate, to increase your overall chances of being approved for credit in future.

3. Applying for and using your first credit card

Before you apply

It’s important to know that applying for credit could impact your credit score, particularly if a full or ‘hard’ credit search is completed and you’re declined.

Look for eligibility tools

Many lenders now provide an eligibility checker to help you to find and compare cards you’re likely to be accepted for, without impacting your credit score. The Lloyds Bank version is called One Check.

Start One Check

How to manage your first credit card

It’s important to manage your account carefully to keep your benefits and protect your credit score: 

  • If you don’t make your payments on time or go over your agreed credit limit, in addition to fees and charges, you could lose any introductory or promotional interest rates on your account. If that happens, your standard account interest rates and fees will apply instead. 
  • Your credit score could also be affected, which may make it harder to borrow in future, so it’s important to keep track and manage your account well. 
  • You must make at least the minimum payment on time each month, but we recommend paying as much as possible to reduce your balance and the amount of any interest you pay overall. This could also help you to avoid falling into persistent debt. 
  • Unless a 0% promotional rate applies, to avoid paying interest on purchases you need to pay off your monthly statement balance in full and on time every month.

Key points about first credit cards

  • Make sure you consider your borrowing needs and other options, including loans or car finance. 
  • To compare credit cards, consider the representative APR, fees and charges as well as any introductory interest rates. 
  • To apply for your first credit card, you must be a UK resident aged 18 or over. Other criteria will also apply. Credit is subject to an assessment of your personal circumstances. 
  • If you’re new to credit your credit score may be low, so you may need to work towards improving it before you’ll be approved for the credit card you really want. 
  • Use an eligibility checker to find and compare cards you’re likely to be accepted for before you apply, without impacting your credit score. The Lloyds Bank version is called One Check.

Where next?

Credit card basics

Related guides

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