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Find the right credit card:

Like any merchandise, you need to compare credit cards too before you actually decide on which one to go for. The selection of a credit card should not be based just on what is good, since there is nothing like a good credit card. Neither should it be based on the recommendations from a friend. The credit card that fulfils your needs is the one which is good for you. Something which fulfils someone else's need would not necessarily be good for you since everyone has their own needs. Moreover, do not get bowled over by all the offers being run by a particular credit card. A lot of them are just selling tactics and might not meet your requirements (and you can't keep changing credit cards each fortnight).

So the first step is to evaluate why you need a credit card. List down all your requirements and classify them as primary, secondary and tertiary needs. Next, search for the credit cards that fulfill most of your primary needs. Compile this information in the form of a list or a document. Now check these credit cards for what secondary needs they fulfill additionally. By this time you should have short-listed 2-3 of credit cards (or maybe just one). Finally use your tertiary requirements to solve the tie-breaker.

Here are the things that you should consider when comparing credit cards:

1. The APR: There is a short term as well as a long term APR. Short term APR is a marketing and sales tactic and is used to lure new customers into signing-up for the credit card. This APR is offered for a short term just after you sign-up for a credit card. So you should really be looking at the long term APR when shopping around for credit cards.

2. Additional benefits: These could be in terms of discounts at a particular store where you shop a lot or discounted car rentals or air fares etc. Again, based on your requirements these may or may not be of your interest.

3. Annual fees: Of course, this is your outgo on credit card services and whether you use your credit card once in a year or 1000 times, you will always have to pay this fee. So it is a very important factor indeed.

4. Credit limit: For heavy spenders, this is a very important feature. Again, check your requirements before basing your selection on this feature.

5. Rewards program: Some credit cards offer very attractive rewards program. These are the points you earn for spending on your credit card. Once you have enough points you can barter them for goods or service and even frequent flyer miles.

6. Interest free period: If you are going to overspend on your credit card, the interest free period might be of particular interest to you.

7. Cash withdrawal fee/charges: These are the charges you pay when you withdraw cash on your credit card. So if you intend to use such a service, this will be of interest to you.

There could be a lot of different offers and you might be enticed to go for them. However, the key is not to get lured by such offers and to stick to your requirements when making a selection.

General Tips for choosing credit cards:

1. Never chose a particular credit card because your friend or someone else has chosen it. Instead base it on your needs.

2. Compare various credit cards before arriving at the right one for you.

3. Always sign at the back of your credit card, as soon as you receive it. This is an important credit card protection mechanism.

4. Protect sensitive information/details about your credit card e.g. PIN. Never reveal the details to anyone.

5. Destroy any mails containing such the details about your credit cards. Fraudsters might be scanning your garbage for such information.

6. Do not share your credit card with friends, family and others. Apply for supplementary cards if you require one for your family etc.

7. Never utilize more than 75% of your credit limit. This will help in containing your credit card debt and also in maintaining a good credit rating.

8. Be prompt in your payments. If you haven't received your monthly bill, enquire with your credit card supplier. Non-payments and late payments tarnish your credit rating.

9. Never let your credit card go out of your sight.

10. There is no magic wand for debt elimination. So take measures for getting out of your credit card debt. This includes things like controlling your credit card usage, using cash on some occasions, debt consolidation etc.

11. In case your credit card gets lost or is stolen. Immediately inform (call) your credit card supplier to get it invalidated. Keep this phone number separate from your credit card.

12. Be prompt in advising the change of address to your credit card supplier.

13. Be aware of various offers / discounts that accompany your credit card. You never know when one might prove useful to you.

14. Do not mistake credit card for free money or a lottery. Remember that you will have to pay for it. So always stick to your budget.

15. Check if one of the special credit cards e.g. student credit card, small business credit card is better for you.

16. Always read all the instructions supplied with your credit card especially the ones related to fee/commissions etc.

17. Redeem membership rewards in time. Don't let the points get expired. Never leave them unutilized when closing your credit card account.

18. Take professional advice if you are too deep into credit card debt.

19. Never get lured by all the free offers on your credit card and end up spending thousands of bucks just to realize later that you can't actually pay it back in time.

20. Never apply for too many credit cards just for fashion sake. Even you don't use them you might still be paying annual fees and them and moreover why keep something you don't need.

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