How To Choose the Perfect Credit Card

As credit card companies are competing for your business and trying to tempt you with all sorts of offers, it can be hard to select just one. In this guide, you will learn how to choose the perfect credit card, one that matches up with your spending habits and your lifestyle. Here are some things to look for, as well as a breakdown of the various types of cards that are available.

*Rewards cards: if you tend to carry a balance, rewards cards aren't such a good choice, as they can end up costing you more in fees, and they also encourage some to spend more to earn the rewards. However, if you manage to pay your whole bill each month, you might benefit. Rewards cards are intended for those who don't carry balances, who spend quite a bit, and who have good credit. If this sounds like you, choose a rewards card that fits with the way you spend.

*Low rate cards: are good for those that typically carry a balance. Cards such as the Capital One No Hassle Cash Rewards card come with low or even no APR to start, and then rates that are comparable with national averages. However, if you want a low rate that won't rise over time, go through a community bank or your local credit union.

*Cash back cards: these are among the most popular, and for good reason- after all, cash is good everywhere! Again, these are best if you can pay your balance in full each month. For most of these cards, you will need good or even excellent credit; otherwise, the benefit you get will be negated by the interest you pay.

*Financial rewards cards: they help you save a bit more with every dollar you spend. For instance, the Fidelity Rewards American Express card gives two percent of your purchase amount, deposited into a Fidelity account, with no annual fees, and no limit on cash rewards.

*Cards that reward with frequent-flier miles: Once again, these cards are best for those that do not carry balances, since the interest rates are usually higher. The average rate on a non-rewards card is 15%, but these airline rewards cards can carry up to a 25% interest rate. Most miles cards have annual fees as well, ranging from $40 to $100 per year. When considering a miles card, think about how frequently you fly and make sure the fee/point plan works to your advantage. Keep in mind that you'll need to earn 25,000 miles to get a free plane ticket.

Each type of card comes with its own benefits and drawbacks, and only you can decide which one is best for your financial situation. Choose the card that offers the best combination of a rewards program, low interest and low fees. If you use the information in this guide, you will be well on your way to knowing how to choose the perfect credit card.