5 Myths About Credit Cards You Still Believe In 2026 In
Renan Filho · Founder & Tech Builder
Quick answer: Think you know how credit cards work in the UK? In 2026, with Bank of England base rate at 3.75% and the FCA tightening rules, five stubborn myths still cost British cardholders real money. From 'always clear your balance' to 'rewards are a scam', we break down what is true, what is fiction, and which cards actually deliver value.
Key data for United Kingdom (2026-08-19)
| Aspect | Detail | Source |
|---|---|---|
| Local index | FTSE 100 | London Stock Exchange |
| Currency | pound sterling (£) | £ |
| Reference rate | 3.75% (2026) | Bank of England (MPC) |
| Regulator | FCA (Financial Conduct Authority) | Oficial |
Myth 1: Carrying a balance always helps your credit score
The myth: you need to show lenders you can manage debt by paying interest. The truth: the FCA and credit reference agencies like Experian and Equifax reward low utilisation, not interest payments. Carrying £500 on a £5,000 limit (10% utilisation) is fine. But paying interest on £4,500 (90%) tanks your score. In 2026, with the BoE base rate at 3.75%, average purchase APR is around 23.4%. That means a £1,000 balance costs you £234 a year. Lenders see high utilisation as risk, not reliability. The evidence: FCA's 2025 Financial Lives survey found 61% of UK adults with a balance did not know their APR. Stop paying for a myth. Clear your balance or set up a Direct Debit for the full amount.
Myth 2: All credit card rewards are a scam
The myth: points and cashback are worthless because annual fees eat the value. The truth: for the right spender, rewards beat fees. Take the American Express Platinum Cashback card: 5% cashback for the first three months (up to £125), then 1% on spending up to £10,000 a year. No annual fee. If you spend £500 a month, that is £60 a year back. Compare that to Barclaycard Avios, which earns 1 Avios per £1. A return flight to Paris costs about 4,500 Avios plus taxes. Spend £4,500 and you get a flight. The catch? Amex is not accepted everywhere. The evidence: Which? UK's 2025 credit card survey rated Amex Cashback as 'Best Buy' for everyday spending. The real scam is paying interest, not earning rewards.
Myth 3: You need a high income to get a premium card
The myth: only high earners get approved for HSBC Premier or Virgin Atlantic Reward cards. The truth: eligibility is based on creditworthiness, not just salary. HSBC Premier requires £75,000 annual income or £50,000 in savings, but the HSBC Everyday Global Account gives you many Premier perks without the fee. Virgin Atlantic Reward card has a £160 annual fee, but you get 15,000 bonus points after spending £3,000 in the first 90 days. That is enough for a domestic flight. The FCA's rules on 'creditworthiness' mean lenders must assess your ability to repay, not just your pay slip. A 2025 study by MoneySavingExpert showed 38% of applicants with incomes under £40,000 were approved for 'premium' cards. The trick: check your eligibility score on ClearScore before applying, so a hard search does not dent your file.
Myth 4: Buy Now Pay Later (BNPL) is safer than a credit card
The myth: using Monzo Flex or Klarna avoids interest and does not affect your credit score. The truth: BNPL is now regulated by the FCA since 2024, and missed payments do hit your file. Monzo Flex lets you split purchases into three instalments with 0% interest, but it is a credit product. Miss a payment and you get a default marker. With a credit card, you have Section 75 protection under the Consumer Credit Act 1974. That means purchases between £100 and £30,000 are protected if the retailer goes bust. BNPL has no such protection. In 2026, the FCA's new 'Consumer Duty' rules require BNPL firms to explain late fees clearly. The evidence: a 2025 FCA review found BNPL users were 12% more likely to miss a payment than credit card users. Your card is not the enemy; your lack of a payment plan is.
Myth 5: You should close old cards to improve your credit score
The myth: closing unused credit cards shows financial discipline. The truth: closing a card reduces your total available credit, which raises your utilisation ratio. Say you have two cards: £3,000 and £2,000 limits. You spend £1,000 on the first. Utilisation is 20%. Close the £2,000 card, and your utilisation jumps to 33%. Lenders see that as risk. The FCA's own guidance says keeping old accounts open with a zero balance helps your history length. The evidence: Experian's 2026 credit report guide recommends keeping cards open for at least 12 months. A 2025 study by Compare the Market found that closing a card with a £5,000 limit lowered average credit scores by 14 points. Instead of closing, set a small recurring payment (like Netflix) on the card and pay it off monthly. That keeps the account active without debt.
Practical example in United Kingdom
£20,000 in an ISA with 6% return grows to ~£35,816 in 10 years, tax-free
Risks and cautions
Volatilidade do mercado, mudanças na política monetária de Bank of England (MPC) e fatores geopolíticos globais são os principais pontos de atenção para investidores em United Kingdom.
| Posição | Produto | Destaque | Melhor para |
|---|---|---|---|
| 1st | American Express Platinum Cashback | 5% cashback first 3 months, no annual fee | Everyday spenders who clear balances |
| 2nd | Barclaycard Avios | 1 Avios per £1, travel redemption | Frequent flyers on British Airways |
| 3rd | HSBC Premier | Global benefits, travel insurance, no FX fees | High earners with international lifestyle |
| 4th | Monzo Flex | 0% interest instalments, app-based | Younger users who want budgeting tools |
| 5th | Starling Bank | No fees, real-time notifications | Minimalists who avoid rewards and fees |
Frequently asked questions
Does using a credit card always hurt my credit score in the UK?
No. Using less than 30% of your limit and paying on time improves your score. The FCA's data shows responsible use boosts your rating.
What is the best credit card for cashback in 2026?
American Express Platinum Cashback leads with 5% introductory cashback and 1% thereafter, no annual fee. It is the best for everyday spending.
Is BNPL safer than a credit card for large purchases?
No. Credit cards offer Section 75 protection under the Consumer Credit Act, which BNPL does not. For purchases over £100, use a card.
Should I close an old credit card I do not use?
No. Closing reduces your available credit and raises your utilisation ratio, which can lower your score by up to 14 points, per Experian.
How does the Bank of England base rate affect my credit card APR?
With the base rate at 3.75% in 2026, most UK cards charge between 19% and 25% APR. Variable rates move with the BoE, so your interest cost rises or falls.
Sources and authority
This guide is part of the MoneyApp financial education ecosystem. For tax questions in Brazil, see Agente Tributário.
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