How to Choose a Good Credit Card

A good credit card will offer benefits that match your lifestyle and spending habits.

There are lots of different credit cards to choose from. Which features you consider important depend on your personal preferences and spending habits. If you want to choose the right card for you, it's important to research the options. Once you see what benefits are out there, you can narrow your choices down to make a decision that fits your unique lifestyle.

Instructions

1. Try a secured card until you get used to paying without cash, if this is your first credit card. A secured credit card is one where you pay cash up front, like a debit card, and that becomes your credit limit. Secured cards are perfect for people with little or no credit history, or for those who need to rebuild their credit.

2. Research credit cards that offer a low annual percentage rate (APR), which means you pay little interest on charges you make to your card. A fixed APR is better than a variable-rate APR, which will change as your balance goes up or down.

3. Watch out for fees. Not all cards have fees, but many do. Make sure you know which ones have a low to moderate annual APR, but check if they charge an annual fee that you might miss if you don't read the fine print on the contract. Also, check what penalties you might incur on late or missed payments. Fees and penalties are different for every card.

4. Consider the rewards offered by each card. There are cards that offer rewards such as air miles, cash back and hotel stays. There are also many cards you can get from retail stores, which offer you special deals and rewards for using the card in that particular store.

Tips & Warnings

• Be careful not to confuse the card's real APR with an introductory APR. When a credit card offers an introductory or limited-time low APR, it does so only for a certain amount of time before the interest rate goes up. A typical introductory APR might be zero percent for the first year, but after 12 months it can skyrocket to 25 percent or even higher.

References

• Federal Reserve: Credit Card Options
• Bankrate.com: How do I get the best credit card deal?
• Forbes: The Best Credit Card Choices From College to Retirement