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Credit Cards - How to choose the right one

Article Summary: Confused by the constant bombardment of credit card offers all claiming to be the best offer? Find out how to choose a credit card that meets your needs and how there is no - one card fits all.

With the vast number of credit card offers on the market, all with different offers yet still claiming to be the best, trying to compare credit cards seems like a complicated business. To make it easy and find your perfect card you have to figure out what you want from a credit card and how you will use it.

Credit cards come with a variety of interest rates, fees, introductory rates, penalty charges, and "bonus" items like cash back, insurance, or air miles. When you compare credit cards, you'll want to look closely at the ones that offer the biggest advantage in the area that's most important to you.

For instance, if you plan to carry a balance even for a few months on your new credit card, you'll want to look for cards that offer low ongoing interest rates. Some cards will advertise an introductory, or "teaser" rate, but after the introductory time period is over the default interest rate will take over. That rate may be quite high, but you won't know that unless you read the credit card agreement — which is something you should do before you decide if this is the card for you.

Maybe the best credit card for you is one that offers air miles. If you'll be paying your card off every month, that may be true. Be warned that most credit cards with a rewards scheme such as cashback, frequent flyers or points will compensate with higher fees and interest rates. You may see a fee to obtain the credit card, an annual fee, and very high interest rates if you do not pay the card in full each month. Once you calculate for all the fees and charges you will probably find the so called 'free' airline points work out to be very expensive.

Once you've determined the factors most important to you, search for the range of products that meet your needs using a credit card comparison website. You can compare cards by class—for example, Rewards cards such as Frequent Flyer, Low Rate or Premium cards. Use this to decide which card you should apply for. For instance, if this is your first credit card or you're early in your career with a beginning salary, a Standard or Classic card is probably your best idea. Many 'premium' cards, e.g. Gold, Platinum have stricter requirements for approval and may be aimed at high income earners. If you don't have a well established credit record, it is not likely you'll meet the requirements. If you apply for credit and are denied, your credit score will take a significant hit that will remain for several months.

However, if you charge quite a bit every month and pay the balance in full, a card that offers rewards like purchase insurance or cash back may be a better offer for you. If you do your homework and find a card with rewards you really want and will financially outweight any costs incurred then you could consider a rewards card. The key when comparing credit cards is to find the best credit card for you based on your planned use of the card, your credit history, and what "extras" you're looking for. Take your time comparing and selecting a card, and you'll have one that will fit your needs for a long time to come.

Article Source: http://www.upublish.info

About the Author:
Richard Greenwood
Author Richard Greenwood writes on a wide range of personal finance topics. He is Director of the Click 4 Group which runs financial comparison sites to compare credit cards and high interest savings products