With hundreds of credit cards available, choosing the best one can be mind-boggling. Do you want cash back? Do you want airline miles? Do you want points when you shop? So many decisions!

When it comes to choosing the best credit cards, it pays to be proactive rather than reactive. Credit card offers through the mail might be a good place to start shopping, but they are certainly not your only options.

So where to start looking? Credit card information can be found on the Internet, in personal finance magazines and in newspapers. If comparing several different cards, use an unbiased resource. A great place to start is CardRatings.com, the most comprehensive free source for credit card rankings. Use our website to compare credit card offers and even apply online.

What to know before you apply

There are things to consider before applying for yet another credit card. Among them is this key: If you’re going to use a credit card, use it wisely. Second, choose the card that is going to work for you (low interest, incentives and services), rather than allowing the credit card company to reap all of the benefits (annual fees, late fees and high interest charges) from you.

Before choosing a card, ask yourself a few questions to help determine which card is the better choice for you.

  1. Which type of card will I qualify for? There are three main categories of cards: secured, regular and reward or rebate. Where you fall on the scale depends upon your credit history. If you’re in the process of trying to rebuild your credit, a secured credit card can help you achieve that. The other categories are differentiated by the types of services they afford. While reward cards generally have great perks, the higher interest rates that they normally charge can be costly if you do not pay your balance in full every month.
  2. How do I intend to use the card? Will you carry a balance or pay your bill in full each month? This question carries the most weight in your decision: if you pay your bill in full, interest charges will rarely, if ever, be applied. Therefore, you can take advantage of those cards that offer attractive rewards at the price of a higher interest rate. If, however, you intend to carry a balance, consider a lowest-interest credit card. Since the rate will be applied each month, you want the very lowest rate you can get, regardless of the lack of incentives available. Please bear in mind that you must have a good credit rating in order to qualify for the lowest rates. As a result, we suggest that you know what you credit score is prior to applying for a new credit card.
  3. What features can benefit me the most? If you rarely travel, then travel rewards, such as air miles, won't be very useful to you. There are a large variety of rewards credit cards available: Cash back incentives; air miles or frequent flier miles; rebates towards future purchases on gasoline, gift certificates, and even cash rebates for a higher education savings plan. Be aware that some cards charge annual fees and some don't. If you are looking at one that does, do some math to make sure that the benefits outweigh the fee you will be charged each year.

Wondering which card is right for you? If you don't want to carry a different card for every situation, you need to choose. These easy questions about how you use your card will help you decide which is the best credit card for your lifestyle.

How to Choose the Best Credit Card

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About the Author

arnold

Curtis Arnold, a nationally recognized consumer educator and advocate, has been educating consumers about credit cards since 1998. New! Curtis is the author of 'How You Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line' (FT Press, 2008). He is also the co-author of the upcoming Complete Idiot's Guide to Person-to-Person Lending (Alpha Books/Pengiun Group USA, April 2009), a contribitor to The Ultimate Allowance (InnerWealth Publishing, 2008) and is extensively featured in 42 RulesTM for Driving Success With Books (Super Star Press, January 2009).