Copyright 2006 Andrew Saari

There are so many different credit cards out there to choose from! Picking the right one for your spending habits can be a difficult decision. Here, we'll try to help you sort through the types, and to make a wise choice.

No annual fee vs annual fee:

*Some credit card companies charge an annual fee just to have the card. Some will waive the fee just for charging a certain amount during the year on it. Many cards that have an annual fee are for individuals with less than stellar credit, although there are others such as rewards cards, and some specialty cards that also charge a fee. If the card offfers a low enough interest rate, it may be worth your while to pay the fee.

Balance transfer credit cards:

*If you are carrying a balance on a higher interest credit card, it may be to your advantage to transfer your balance to a card offering a lower interest rate. This rate can be as low as 0% for a length of time that varies widely between card issuers. Typically, this can be from 3-18 months, although some carry the lower interest rate until the balance is paid off. Be sure to read the fine print for any balance transfer fees that may apply.

Low interest credit cards:

*Some credit card companies offer a low interest rate. This often includes a low introductory rate on purchases, which will increase after a specified amount of time-normally from 3-12 months. Again, read the fine print to see what the interest rate will be after the introductory period ends, and check to see if an annual fee applies.

Reward credit cards:

*These cards reward you for using them. The more you charge on them the more you get back. These are ideal for individuals who pay off their bill in full each month. The rewards can vary widely by issuer. Typical rewards include: cash back on all purchases, airline miles, store discounts and other perks. Be sure to read the terms and conditions thoroughly before applying. And, make sure if you use these cards, pay off the balance in full each month. The interest rates are normally higher than other cards to compensate for the rewards. You don't want to lose what you gained in rewards to interest charges.

Student credit cards:

*These cards are for students who generally have little or no credit history. Often, they have more restrictions than a non-student card. Some require a parent or guardian to co-sign. This would mean if a student defaulted on all or part of their payments, the parent would be responsible. The parent or guardian can also get a statement sent to them or have online access to it, and would have control over increases in future raises in the credit limit. Student cards can help teach financial responsibility, as well as build credit history.

Business credit cards:

*Business credit cards are generally available to business owners as well as emplyees. They can help keep business expenses seperate from personal expenses. They also offer many of the same features as traditional credit cards, such as low introductory rates, cashback rewards, airline miles or gifts. You may even use the rewards as an incentive to employess at no out of pocket expense to the business.

Secured credit cards:

*If you have poor credit, you may need to get a secured credit card. With a secured card, you secure the card by depositing cash up front in a savings account or to the credit card company. The amount of funds you place on deposit will generally match your credit line. Your card issuer has a lien on the deposit account, which you stand to lose if you fail to make your credit card payments on time.

A secured credit card looks just like a regular one, and the law specifies that it has all the same consumer protections. A secured card typically carries a higher interest rate. But, a secured card can be a good deal because it offers you ability to have a credit card while you work on establishing or rebuilding your credit rating.

Debit cards:

*Debit cards look like a normal credit card, and are accepted anywhere credit cards are. They work more like checks than credit cards though. You can also use it at an ATM to withdraw cash from your account. The money comes directly out of your checking or savings account immediately when you make a purchase, instead of waiting for the montly bill. And, consumers who use debit cards don't have all of the same protection as credit card users. Conusmers don't have the right to withhold payment in the event of a dispute with a merchant, and if your card number is stolen, your account may be emptied before the bank can complete an investigation.

Hopefully, this information will help you sort through the credit card maze. The most important thing to remember is to read the cardholder agreement closely to find out the terms-especially after the introductory period is over. And, always consult with your financial advisor before applying for any credit card or making any major financial decision.