Deciding which credit card is right for you

By Ben Woolsey

If you are trying to choose between credit cards, take these factors into consideration before filling out an application:

• Interest rate
• Reward programs
• Annual fees
• Member benefits

Interest rate
If you pay off your balance every month, a low interest rate probably isn't too important to you. But about 45 percent of cardholders carry a balance and pay monthly interest. If you tend to carry a balance, a credit card with a low interest rate could save you a lot of money.

Reward programs
Most issuers offer credit card reward programs that pay you back for specified spending. If you travel frequently, this type of card could result in a few free plane tickets each year. Be aware that you have to earn a large number of points before attaining rewards, and points may expire, so this type of card will not benefit infrequent users.

Annual fees
Credit card perks often have a price: annual fees. Consider whether the benefits you get from a card outweigh the fee. For example, if you're not going to be using the card frequently and aren't likely to earn a reward, is an $85 annual fee really worth it? Many credit cards have no annual fees.

Member benefits
Benefits vary from card to card. Some offer travel protection. Others offer roadside assistance. These benefits can be useful if they match your lifestyle. Weigh the pros and cons of its benefits. For instance, if you don't travel often, you may not want to go with a card that has travel benefits. 

See if you can get the same benefits elsewhere for a cheaper price. If you are already an AAA member or could join for a very low price, for example, a credit card's roadside assistance perk wouldn't be useful.

When selecting a credit card, it helps to take these factors into consideration and pick the card that best fits your lifestyle and credit situation.

Published: July 25, 2005

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