Credit Card Basics - Make The Right Choice

The current wisdom on credit cards and credit card use is that you should keep the number of credit cards you hold to six or less, and you should use them 'wisely'. That word 'wisely' is a loaded word. It often means 'don't use your credit card unless you can pay it off right away' - but there are times and places where different credit cards offer different advantages. If you're getting ready to apply for a credit card, here are some times to help you choose the best credit card - or cards - for your use.

If you don't already own a credit card, consider your finances and the reasons you want to apply for a credit card. Some reasons are better than others, but whatever they are, they'll help you choose the right credit card for what you need. For instance:

• If you want a credit card for life's little emergencies, but don't expect to use it for regular purchases, then your best credit card choice is one with the lowest APR you can get.
• If you want a credit card for a particular purchase, say to buy a computer when it's on sale at your local High Street shop, you may be tempted to apply for store credit. Unless the shop is offering a special deal - say no interest for six months - and you can meet the terms of the offer, don't do it. Store charge cards are among the most expensive available. Instead, shop around for a low interest credit card and whack your purchase on that instead.
• Already gone ahead and used a store credit card to take home a pricey new toy (or necessity, for that matter)? Compare interest rates on balance transfer credit cards to see if it would save you money to transfer the balance from your store card to a new big name card. Chances are a balance transfer deal could be your best credit card option in that case.
• If the main reason you want to apply for a credit card is to even out your finances over the course of the month, then your best credit card deal is likely a reward or cashback credit card. This only makes sense if you're disciplined enough to keep your spending in check and never charge more in a month than you can pay off when you get your account statement.

In short, if you intend to carry a balance on your credit card - as you would if you use it for a major purchase or an emergency - then the APR should be your main point of comparison. If, on the other hand, you intend to pay off the full balance every month, APR is unimportant as you won't be incurring interest charges. In that case, compare the rewards and benefits that come along with being a card member and choose the one that gives you the most for the least investment.

There is one other choice you can make to save yourself the expense of late fees and penalties and increased interest rates. Choose to pay your monthly account by direct debit from your current account. If you make a point of whacking all of your purchases on one rewards or cash back credit card, you can arrange to pay the account off by direct debit before the due date each month - and never have to worry about it.

When you've decided to apply for credit cards, you can compare online at moneyeverything.com. They make it easy for you to compare similar credit cards and choose the best credit card deal for your circumstances.