CFD instruments have “SWAP” fees. Which you have worked out.
In general, use the account types as follows:
Works best when used on a short timeframe. NOT long term.
Timeframe: 1day to 1month
Example - You think the market is going to drop next week.
You use CFD to gain extra leverage on the instrument you are trading in hopes of getting a larger return if the market goes the direction you expect. Inversely, if the market goes against you, your losses will be larger.
To get this added benefit, a SWAP fee is charged overnight.
Additionally if the stock pays dividends, and you are SHORT, you must pay the dividend rather than receive the dividend. If you are LONG the position, you receive the dividend just as normal.
If the stocks go down below your Margin requirements, your positions will lockup until you add more money or until the value gets so bad that Trading212 will close these positions automatically. So be extremely careful!
In a nutshell, use CFD if you need short-term added leverage or if you wish to hedge out a position you already hold in your Invest/ISA account.
Best for building a portfolio of stocks you wish to keep over a long timeframe.
You can buy stocks with no obligation to sell and no overnightly fees.
Best used when you wish to keep trades going for months & years.
Given your account balance amount, I would strongly suggest you to move funds to the Invest/ISA account as there will be no overnightly fees.
If you feel like you need to hedge a position, or you feel a company will underperform/overperform coming in to earnings reports, you could add leverage by buying a CFD contract a week prior to these earnings reports and hopefully profit if your prediction comes true and the market rallies/crashes. This is just one example use case.
Hope this helped clear the air.