If you’re planning a move to the United Kingdom, or have recently arrived, you’ve probably already given some thought to the essentials, including financial essentials. That includes setting up a UK bank account and informing any relevant US financial institutions that you’ll be abroad. But when it comes to most peoples’ day-to-day transactions, a debit card is rarely the go-to. Instead, you’ll want a credit card. But how to get your first UK credit card? Will your US credit history follow you to the UK? What kind of credit offers are you eligible for?
Let’s have a look and find out:
Am I eligible?
First things first.
Just because you’re based in the UK, even if you have a UK bank account, you may not be eligible for a UK credit card.
Specifically, students in the UK – even if you have a lengthy credit history in the US and a US credit card – generally won’t be eligible for a line of credit. This is especially true if you’re holding a student visa, and/or have a student bank account, which limits things like whether or not you can use an overdraft, and generally means you’re unlikely to be approved for a credit card.
On the other hand, if you’re employed (or self-employed) in the UK, you’ll likely be eligible for at least some form of credit. Bear in mind in the case of self-employment, though, that many credit cards will base your credit limit on your average income over the past two years, so you may want to have been working for some time before applying.
Which card?
So, if you’re living and working in the UK, and want to apply for your first-ever UK credit card, the next question is, which card should you apply for? Well, it may be a little frustrating to hear this, but you can’t count on your American credit history to secure you a good offer. Instead, you’ll likely have a credit limit offer based on your UK income, expenses and any UK debts you may have.
If you don’t have much of a financial history in the UK yet, one of the best options for a first UK credit card is to apply through the bank where you hold an account, This can be done online through your banking app, and many banks will helpfully color-code different card offers to reflect the likelihood of your being approved: green icons for cards you have a high chance of being approved of, yellow for medium, and red for low.
Given that newcomers to the UK likely don’t have an extensive credit history, you’ll probably have the best chance of being approved for relatively basic cards, rather than those with very high limits and extensive rewards programs. Your limit will be based on your earnings, and your interest rates will be in line with the standard—usually around 25-percent annual percentage rate.
Remember, if you have poor credit, that won’t stop you from getting a UK credit card. In fact, there are specific cards designed to help you build your credit back up. These are known as “credit builder” cards, and while they typically have a somewhat higher APR, they’re also typically the easiest type of card to get approved for, and can help you develop a solid credit history in the UK even if you’ve had some prior financial issues.
One other thing to consider when deciding what credit card to apply for is international transaction fees. While as an expat, you probably already have other means of paying for things in North America, if you intend to travel in the EU, or elsewhere around the world, you might want a card with low (or nonexistent) international transaction fees, meaning that you can use it on trips and avoid the hassle of changing currency, or a hefty fee awaiting you at the end of the month.
Here’s a link to the British credit cards with no international transaction fees.
Building credit
While your UK credit card can be extremely useful for paying for day-to-day expenses and larger purchases, that’s not the only thing they’re useful for. As in the US, your credit score can be an important factor in getting a mortgage, or even taking out a business or personal loan. And as you’re probably already aware, your US credit score won’t impact your ability to, for a common example, secure a good mortgage rate in the UK, but your UK one absolutely will.
Remember, if you’re looking to buy a family-home, or secure a large loan to start a business, you may need to be patient. This can include paying off your card’s balance every month, applying for multiple cards and regularly paying off the balance, and more. You may also want to speak to a British financial advisor about your long-term goals and the best strategy to build towards them.
In the meantime, though, good luck with getting your first UK credit card, and enjoy your new line of credit!
–––––––––––
Read more about the UK here in Dispatches’ archives.
See more from Ellery here.
Ellery Weil
Dr. Ellery Weil is a writer and historian based in London. She was born in Washington, DC, raised in Maryland, and attended undergrad in Ann Arbor, Michigan, before moving to the UK to attend grad school at University College London, where she earned her PhD in History. She lives in London with her husband, where you can find her writing, reading, petting dogs in Regent's Park, and exploring the city's antique markets.
