How to Choose a Credit Card

In today’s world, credit cards are a fact of life. Just try and rent a car, reserve a hotel room, or make an airline reservation without one. Moreover, if used responsibly, they can be an effective financial tool and help you establish credit. But how do you decide which card is right for you? Here are some tips:

• If you pay off your balance every month, no or low fees are most important. Look for a card with no annual fees and then get one with some type of reward program. You can get credit cards that reward your usage with points toward free gas, travel, catalogue items, etc.
• If you carry a balance on your card, low interest rates are most important. Simply put, find a card with the lowest interest rate. A lower interest rate will more than offset any annual fees.
• www. bankrate.com, www.cardratings.com, and www.lowcards.com are all good websites to do comparison shopping for credit cards. You can get some good information and compare offers.

Once you find a card you like, make sure you read the application and understand all of the terms and conditions. Some other things to look for are:

• Is the interest rate fixed or can it change?
• If there is an introductory rate, how long does it last?
• What happens if there are mistakes or errors on my account?
• What happens if I have trouble paying my bill?
• What are the fees that can be charged if I am over my credit limit or make a late payment?

Don’t open up a credit card to receive a “special gift” or to save on your purchase. Often times, interest rates on those cards are very high, and unless you have a plan to pay it off within a month, you are not saving anything. In addition, you now have another tool in your wallet to make an impulsive purchase at that store that you might not have made, if you didn’t have that credit card.