Credit Card Basics — Choosing a Credit Card

Choosing a Credit Card

With literally hundreds of different credit cards available today—all with various combinations of benefits, fees, terms, interest rates and rewards—choosing the right card for you may seem overwhelming.

Before you apply for a new credit card, spend some time thinking carefully about your spending habits. Ask yourself:

  • How often will I use the card, and for what purchases?
  • Will I pay off the balance every month, or am I likely to carry a balance?
  • How much of a credit limit will I want or need?

Knowing what to look for can help you narrow the field, and find a card that fits your needs. For example, if you plan to use the credit card regularly and pay off the balance every month, then interest rate probably won’t matter to you as much, but the rewards you can earn with your purchases might. However, if you are going to use the card to make one or two major purchase and pay it off over time, then the interest rate would be a very important factor for you.

When you choose a credit card, it is your money (and your credit) that’s at stake, so it’s a good idea to comparison shop. Web sites like can help you compare different credit cards according to your needs.

When deciding what credit card is best for you, check out the details. Here are some of the terms you’ll want to consider:

  • Annual fee (if applicable)
  • Annual Percentage Rate (APR) for purchases
  • Annual Percentage Rate (APR) for balance transfers and cash advances
  • Grace period
  • Other fees (such as balance transfers, late payments, and cash advances)

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