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Great reward options or low interest rates? Yes, those could be great credit card options. But there are a few other things to consider before you start charging. Deciding on the right credit card for you includes assessing several criteria including your personal spending style, credit limits, fees and penalties in addition to interest rates and incentives.

1. Personal Habits

How you plan to use your card will affect which one you should get, so it’s a good idea to know yourself and how you spend. If you plan to pay the credit card bill in full each month, interest rate is less important so it may be best to look for a card with no annual fees and better rewards. If you are likely to carry a balance (not that we recommend it!), you want the lowest possible interest and introductory rate. If you are going to use the card often, be on the hunt for a generous credit limit, solid rewards program and potential for cash back. For those who use credit cards sparingly, it’s important to make sure there isn’t a penalty for not swiping often enough. Choose a balance transfer card if you are paying off balances on multiple credit cards and want to consolidate your debts. If you fly frequently, consider an airline credit card to help cover your travel expenses.

2. Interest Rate

APR is the magical term here — also known as annual percentage rate. This can be fixed or variable and is tied to another financial indicator, likely the prime rate. In general, the lower the better when it comes to rates. It’s a good idea to pay attention to those mailings that come your way — they could be informing you of a change in terms. 

3. Credit Limit

This is the maximum amount that a credit card issuer will let you charge, or borrow. It can depend partly on the company backing the card, but your credit history also plays a role. You do not want to be in a situation where you are consistently maxing out your limit as this can hurt your credit score, lower the credit limit you will be offered in the future and could result in penalties.

4. Fees & Penalties

These are often listed in the fine print. Credit card companies often charge fees for such things as going over your credit limit, paying your bill late or taking out a cash advance. It’s important to pick cards that don’t charge fees for things you think you may do. For example, if you plan to transfer other balances onto a card, it’s a good idea to make sure the balance transfer fee is small or nonexistent.

5. Rewards & Incentives

On to the fun part — from sign-up bonuses and points to rewards rate and total rewards for a year, understanding and comparing incentives can be difficult. While issuers may use rewards programs to lure customers, they can be a great benefit to you if the card and points are used strategically. It’s a good idea to search for a program that allows flexibility and rewards you will likely use that are both easily earned and easily redeemed. Also, some rewards credit cards cost money to use. It’s important to be sure you are not paying extra for your program unless the rewards outweigh the cost. For example paying a $50 annual fee may make sense if you are able to save $100 in travel costs that you would have incurred anyway, but it doesn’t necessarily make sense if you will earn only $25 in rewards.

Once you decide which card is right for you and have it in your wallet, it’s important to remember to use your card responsibly.

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