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How to Pick the Perfect Credit Card

If you're going to carry plastic, you want it to fit your spending habits. Here's how to find out what's best for you.

Each day, consumers face a slew of credit-card offers in the mail and on the Web -- so how is anyone to decide which offer is best for them?

There are cards touting everything from 0% intro APR to cash-back rewards, and plenty of retail and travel incentives. Many people are overwhelmed by the sheer volume of offerings and are often confused about which one would grant the cheapest credit and best deals.

The solution lies in the way you use your credit card and what kind of rewards best fit your lifestyle.


If you pay off the full balance each month, look for the biggest incentives rather than the lowest interest rate. Getting a lower rate doesn't hurt, in case of unforeseen financial pressures that would create a revolving balance, but that doesn't have to be the main objective.

Figure out what type of reward works best for you -- whether airline miles, hotel points, car rentals, merchandise, fuel or simply cash back -- and pick the card with the most rewards and the lowest fees.

Nearly every bank and card issuer -- from

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-- offers a card specifically designed for travel rewards.

For instance, say you spend a lot on travel and want a card that racks up the most airline miles. One card offers a mile for every dollar spent with a 10% interest rate, and another offers two miles for every dollar spent with an 18% interest rate. With the second card, you'd get twice as many miles -- and if you pay your entire bill each month, the higher rate won't sting.

While a J.D. Power and Associates study last year found airline miles to be the most popular type of rewards program, it also found that customers were less satisfied with those incentives because they were difficult to redeem. Those who collected hotel rewards points or cash were generally more satisfied.

"Cash back is generally the best deal going, and you generally get the best percentage back," says Amanda Walker, senior project editor at

Consumer Reports



On the other hand, if you don't always pay off your balance in full, getting the lowest interest rate should be your top priority. Online resources such as


can sort offerings by the lowest APR and outline the introductory rates, annual fees and balance-transfer rates.

If you don't have a stellar credit record, don't expect to be eligible for very low rates. That's especially true in the current credit environment with stricter lending standards.

Walker also advises consumers to read the fine print. Many offerings advertise special rates and terms that can be altered for various reasons or change drastically after a certain period.

Balance Transfers

If you're applying to transfer a balance from another credit card with a very high interest rate, make sure to get a 0% introductory rate. The longer the introductory term, the better, to ensure that you can pay off as much of the sum as possible within that set timeframe.

Such situations are often set up with a dual interest-rate structure -- one for the existing balance and one for new purchases. Walker warns that consumers shouldn't charge any additional purchases on those cards, because payments will often go toward the balance with the lowest APR.

In addition, there are other fees associated with balance transfers, so make sure you know what they are before you sign up. Walker says an old ceiling of 3% interest and a maximum fee of $75 is no longer present on most cards.

Switching Cards

Plenty of Web sites offer card-comparison tools.


is especially handy because it figures out which credit card offer will save you the most money based on your spending, balance and other metrics. The site doesn't require personal information, except for what type of credit card you have now.

This summer, it's also rolling out a feature for reward-oriented customers to compare what kind of savings and rewards they are eligible for on an array of cards.

The site receives commissions from issuers when users sign up for the cards, though Ziv Yirmiyahu, president of the site, said they are "very similar to each other" and that there is "no bias here to any direction."