As a nation we have fallen in love with credit over the last decade. If you are thinking of getting a credit card, you may find the huge variety of deals available overwhelming.
Here are the key issues to consider before choosing or changing your card.
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The best card for you
Before taking out a credit card you should think about what you need it for.
There are many different types of credit cards on the market, from balance transfers to cards which give you cashback in return for spending.
We're rounded up the top five types of cards, so you can work out one is best for you.
0 per cent purchase What is it: 0 per cent interest on any spending you do on the card for a limited time. After this period the interest you pay will drastically rise. Best for: Anyone wanting to buy a large item and pay it off within the interest free period.
Balance transfer What is it: This card allows you to transfer your balance and pay it at a lower rate (usually 0 per cent). Best for: Anyone who has a large balance that they need time to pay off. Beware of spending on this card however as APRs are usually high.
Rewards/cashback What is it? These cards reward customers for spending - you can earn back cash, points and even airmiles. Best for: Anyone who is very good at paying their balance off in full each month and wants to earn extra for spending.
Best for abroad What is it: These cards offer no, or very little, commission or fees when using them abroad. Best for: Anyone who is going on holiday or regularly needs to spend abroad.
Special offers
Many banks have special debt-transfer offers to recruit new customers. These may give you the opportunity to pay off debts from an expensive card at a reduced rate for a limited period.
There are dozens of cards on the market offering 0 per cent interest on balance transfers, from six months but the best offer is currently up to 20 months.
Be aware that the reduced rate does not apply to new spending, only to the transferred balance. Some firms waive the first year's annual fee for new customers with a certain amount in their bank account. Some cards offer free purchase protection insurance.
Protection
Paying for expensive items (goods or services over £100 and under £30,000) with plastic offers the advantage of extra consumer protection. Section 75 of the Consumer Credit Act makes the card company liable (along with the seller of goods or services) in case of breach of contract.
So if you don't get the goods you ordered, for example, and the firm goes into liquidation, you should be able to get your money back on your credit card.
Purchase protection schemes run by the card companies - in addition to those legally required by section 75 of the CCA - require you to spend £100 on one purchase to qualify for this valuable protection. This does not apply to most debit cards, such as switch and delta, where the money leaves your account automatically.
INTERACTIVE TOOL: Compare the best credit cards
Penalties
Most, if not all, cards will charge you if you miss the monthly deadline set for your payment. However, after lobbying of the credit card industry, the maximum any provider can charge is now £12. Some lenders also strip away special low rates.
The easiest way to avoid this penalty is to set up a Direct Debit from your current account to your credit card to pay off at least the minimum amount each month. Ask your card provider for a form.
You will also be charged if you go over your credit limit. There can also be catches such as charging you interest immediately on a new purchase if you didn't pay off your last bill in full.
Cash
If you withdraw cash using your credit card you will pay a much high rate of interest. This also applies if, for example, you use your credit card to pay for foreign currency, unless the card is for specific use abroad.