Best Credit Cards - How to Pick the Right Card for You

Bob Hopkins
Mar 7, 2007
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On question often asked is "what's the best credit card available?" The truth of the matter is that there is no one credit card available that is the best for everyone. Choosing the right credit card for you has more to do with your credit card spending and repayment patterns than anything else. In order to find out which credit card is best you need to think about your credit card usage. For example, do you pay the balance in full each month, do you carry debt over and incur interest and so on. See which of the statements below fits your credit card usage.

"I don't pay by credit card bill in full each month"

If you carry a balance over from month to month, you need to look for the lowest rate interest card available. Some cards charge high rates of 18% and upwards per annum, others charge less than 10% per annum. The interest rate makes a huge difference to the monthly minimum repayment amounts and also the ease at which you can pay down debt. A low interest rate is more important than a rewards program if you are carrying debt.

"I only use a credit card occasionally and normally pay it off each month" If you are a light credit card user and tend to pay it off in full each month then the most important factors to consider will be the cards annual fee and the number of interest free days on purchases. Many credit card issuers have cards with no annual fees. They tend to offer less in the way of rewards schemes but as a light user you are unlikely to benefit from such schemes. Look for cards with a low or no annual fee offering instant rewards and discounts. These are partner offers that can be used at any time without accumulating points.

"I buy most things with my credit card and then to pay if off each month" If you do most of your spending via your credit card and tend to pay it off each month then you may benefit from a credit card offering a rewards scheme. Often rewards credit cards have higher interest rates or annual fees than other types of credit cards. However, interest rates are not important so long you pay the bill each month and the rewards could well exceed the card fee. Frequent flyer credit cards are the most popular type of reward card. A spend of around $2000 per month can earn the equivalent of 4 short haul return flights per year with many airlines.

Other factors to consider when choosing a credit card

Interest free days: When looking for the right credit card for you, you will find that there are two main types of credit cards: those that offer interest free days and those that don't. Generally, those that offer interest days charge a higher interest rate after the end of the interest free period or charge an annual fee to compensate. Many credit card companies now offer to up to 55 days interest free on purchases. Cash advances normally incur interest straight away and often at a higher rate than purchases.

Late payment penalties: When evaluating which credit card is right for you, it is important to consider the late payment penalties. If a late fee is charged, what is it? Is an increased interest rate also enforced as a penalty? Some companies more than double your interest charges if you pay late even by one day.

Customer service: It is also helpful to consider a company's track record in looking after their clients. Why not phone the customer service lines of your short listed credit card companies? Who do you want to deal with? Are you kept on hold for an excessive length of time before someone takes your call or are you answered quickly? If you can't get good customer service from a company, you should probably forget them. Another important consideration is whether they are using overseas call centres that have access to customer's private details. If you don't have a problem with this, fine.


If you intend to use your credit card to pay bills and will pay the complete balance each month, look for a credit card that offers the best value in terms of interest free days and rewards. However, if you are going to be in debt from month to month, look for the lowest interest rate, lowest annual fee and fairest calculation of penalties (because things can go wrong sometimes).

If you are juggling a number of credit cards of varying interest rates and have overall high monthly payments because of credit card debt, then consolidating your credit card debt on one low rate interest card could be the answer you are looking for. By consolidating your credit card debt on one low rate card, you will dramatically reduce your minimum monthly credit card costs and improve your ability to pay down debt.

Debt consolidation, using a low rate credit card, can also provide more flexibility than a personal loan. If an emergency occurs then the credit is still there to use. The obvious risk to this, however, is using the credit and never getting out of debt. Debt consolidation with a credit card requires discipline and commitment to get out of debt.

Best Credit Cards Summary - The right credit card for you

Carry balance over each month = Low interest credit cards

High levels of existing debt to pay off = Low interest / balance transfer credit cards

Pay balance off in full each month / low credit card usage = no annual fee credit cards

Pay balance off in full each month / medium-high credit card usage = rewards credit cards