Finding the best credit card

November 19, 2010

By Barbara Marquand | Money Rates Columnist

Credit cards are not a one-size-fits-all product. The best credit card for your neighbor might not be the right fit for you. Much depends on your finances and how you plan to use the account.

Here's what to seek, depending on your needs:

1. I need to carry a credit card balance from month to month.

Look for best APR credit cards with no annual fees. Read the fine print of the terms and conditions to see how much you'll pay, and don't confuse introductory rates, which last for a limited period, with standard rates that kick in once the promotional periods have ended. Beware that you might not qualify for the lowest advertised credit card rates if your credit needs improvement. Some credit cards feature three to four tiers of rates, with the lowest tier offered only to customers with sterling credit.

2. I always pay off my credit card bill in full every month.

Make your credit card work for you, and shop for one that provides rewards you can use, such as best cash rebate credit cards 2012. Reward credit cards tend to have higher interest rates than non-reward credit cards, but as long as you pay your bill in full and avoid using the card for cash advances -- which have no grace period and carry higher interest rates -- you shouldn't have to pay finance charges. Look for reward credit cards with no annual fees.

3. I travel frequently.

Compare credit cards that offer travel rewards and discounts, but don't get so seduced by the promise of rewards that you ignore the interest rate if you plan to carry a balance. Also, read the rewards agreement to check for blackout dates and other exclusions that could make redeeming rewards tricky.

4. I have less-than-perfect credit.

Beware of credit card offers that prey on people with poor credit. Some of these credit cards come with hefty processing fees, outrageous interest rates, and high annual fees for credit limits of only a few hundred dollars. Read credit card agreements carefully to spot any hidden fees and "gotchas."

5. I want to build credit for my small business.

A small-business credit card offers helps you keep business and household expenses separate and build a cleaner paper trail for tax purposes. A business credit card also enables you to begin building a credit history for your business. Beware, though, that business credit cards weren't included under the Credit CARD Act, so none of the consumer protections in the new federal regulations apply, although some issuers are voluntarily extending some of the protections to business customers.

Once you've determined your needs, compare credit card offers online to find the best deal for your financial lifestyle.

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