Choosing the Right Credit Card for You

Before you start looking

Before you start shopping around for a credit card, think about how you will use it and set some guidelines for yourself. Here are five key points to remember:

1. A credit card doesn't increase the money you have available, so all of your credit card spending should fit within your regular household budget.
   
   
2. Using a credit card to get cash (called a cash advance) or for other cash-like transactions, such as a wire transfer or money order, is generally not a good idea.  It costs you interest from the date of the transaction.  If possible, use your debit card instead.
   
   
3. If you pay your credit card balance in full every month and you don't use the card for cash advances or cash-like transactions, you will never have to pay interest. If you don't pay in full, the interest charges you pay will increase the cost of everything you buy with the card.
   
   
4. If your credit card balance grows from month to month, that's a sign that you are overspending and could be on the road to serious debt problems. Stop using your card until you get your debt under control.
   
   
5. Applying for a new credit card because you have reached your credit limit on your other cards is not a good solution to managing your debt. Instead, look seriously at how you can reduce spending.  As you adjust your budget, remember to include regular payments to pay off your credit card debt.

Most credit cards, whether they are standard, gold or platinum, have the same basic function: they offer a convenient way to pay for goods and services. The main differences are in three areas: interest rates, fees and rewards and benefits. Looking carefully at those details will help you find the right credit card for you.