Summary
There are hundreds of credit cards to choose from. This article provides good advice to get you moving

Choosing a Credit Card

A credit card is a "buy-now, pay-later" tool. A credit card is an unsecured loan that a financial institution provides to you as a payment convenience. In the crowd of hundreds of credit cards, its challenge to choose right credit card that best suites your need. Choose a card that matches your lifestyle and works for you instead of against you. Shop around for credit card terms that are best for you and can save you money on interest and fees.

You may have received lots of mail regarding pre-approved credit cards, but be careful, before accepting any of the credit card. Following article explains the facts of choosing credit card. Remember, Credit Card provides the credit and hence generally involves finance charges and other costs. So before accepting make sure you are not getting in trap.
 
Some of the factors to consider before applying for credit card are:
Know yourself, your spending pattern, identify requirements, repayment habits and look for cards that best suit your need.
Know and analyze the terms and conditions of offer and read small print before applying.
Understand the features, cost & fees, minimum repayment criteria and special offers of credit cards.
Compare credit card charges and other associated costs.
Use credit responsibly and wisely with self discipline.
Remember, credit card can give you the purchasing power - Ability to buy needed items, convenience - Don't have to carry cash, Creates a record of purchases, Can be more convenient than writing checks, Ability to consolidate bills into one payment, Generally more secure than cash or checks, security and protection, Many offer frequent flier miles, cash-back incentives, or other benefits or extras. if used appropriately.

When used carelessly, credit cards can lead you down a road in which you may owe more than you can repay, damaging your credit and creating problems that can be difficult for you to fix. Potential higher cost of items (interest and finance charges, other fees) if paid back over time. Easy to spend beyond your means, resulting in financial difficulties, not paying bill on time can negatively affect your credit history, making it more difficult to get a car loan, a mortgage, or even acquire car insurance
 
Credit Card Terms
Before selecting a credit card, learn about following credit terms and conditions that apply.
 
* Annual Percentage Rate (APR): It is a measure of the cost of credit, expressed as a yearly rate. The Annual Percentage Rate (APR) is the cost of carrying a balance on a loan or credit line, expressed as an annual percentage. This is the amount of interest you will be expected to pay, should you borrow on credit card.
 
A single credit card may have several APRs:
APR for purchases. This APR is applied to purchases made using credit card.
Cash advances APR. This is applied to cash advance from credit card. Transfer to bank account is also Cash advance
Balance transfers APR. Any balance transfer from other places will be charged using this APR. Many offers include 0% introductory APR on balance transfer.
Tiered APRs. Different rates are applied to different levels of the outstanding balance
 A penalty APR. The APR may increase if you are late in making payments.
An introductory APR. A different rate will apply after the introductory rate expires.
 A delayed APR. A different rate will apply in the future.
Fixed APR. The APR doesn't change.
Variable rate APR. The APR changes from time to time. The rate is usually tied to another interest rate, such as the prime rate or the Treasury bill rate
* Annual Fees: Many issuers charge an annual fee simply for granting your credit, while others offer special services and benefits such as frequent flyer miles and award programs. These fees range from $25 to $50 for most cards, and from $75 on up for premium "gold" or "platinum" cards.

* Free Period/Grace Period: This is the amount of time between the date of a purchase and the date interest starts being charged on that purchase.
 
* Transaction Fees and Other Charges: A credit card also may involve other types of costs. For example, some card issuers charge a fee when you use the card to obtain a cash advance, when you fail to make a payment on time, or when you go over your credit limit. Some charge a flat monthly fee whether or not you use the card.

* Balance Computation Method for the Finance Charge: If your plan has no free period, or if you expect to pay for purchases over time, it is important to know how the card issuer will calculate your finance charge. This charge will vary depending upon the method the card issuer uses to figure your balance. The method used can make a difference, sometimes a big difference, in how much finance charge you will pay -- even when the APR is identical to that charged by another card issuer and the pattern of purchases and payments is the same.
 
* Average Daily Balance: (including or excluding new purchases). The average daily balance method gives you credit for your payment from the day the card issuer receives it. This is the most common method used by credit card issuers.

* Adjusted Balance: This balance is computed by subtracting the payments you made and any credits you received during the present billing period from the balance you owed at the end of the previous billing period. New purchases that you made during the billing period are not included. The adjusted balance method usually is the most advantageous to card users.

* Previous Balance: As the name suggests, this balance is simply the amount that you owed at the end of the previous billing period. Payments, credits, or new purchases made during the current billing period are not taken into account.

Credit Card Fees: Following are some of the fees the credit card companies may charge.
Cash advance fee.
Balance-transfer fee.
Late-payment fee.
Over-the-credit-limit fee.
Credit-limit-increase fee.
Set-up fee.
Return-item fee.
Other fees.
Amount Due: On a billing statement, the amount due is not your total balance, but rather the minimum payment for one billing cycle to keep your account current.
 
Credit Limit: Your credit limit is defined in dollars as the total amount of credit you are authorized to use If you exceed the limit or fail to pay minimum balance against that limit, you may be charged an over-the-limit fee or have your credit privileges canceled.
 
Balance Transfer: A balance transfer is the process by which you can move a credit card balance from one card to another. In many cases, balance transfers can be made at a special discount rate.
 
Daily Periodic Rate: The DPR (the Annual Percentage Rate (APR) / 365) is the rate of interest on your outstanding credit balance per day.
 
Finance Charge: Based most commonly on a percentage charge, a Finance Charge is applied to your outstanding balance as a fee for carrying a balance, usually monthly.
 
Minimum Monthly Payment: Often interchangeable with the Amount Due, this is the smallest payment you can make to keep your account current.
 
Prime Rate: A major economic indicator often used to set variable interest rates for credit cards and loans, the Prime Rate is what banks charge for loans to their biggest and highest-rated customers.
 
Revolving Credit: This is a typical credit card agreement that allows consumers to pay all or part of the outstanding balance. As credit is paid off, it becomes available again for other purchases or cash advances.
 
Finance charges: Finance charges are the cost of having access to a line of credit. The credit card charges are different for each of the type of transaction. i.e.  Purchases, Cash Advances, Balance Transfers etc.
Late Charges: Late charges are penalties assessed on your account as a result of late payments.
 
Minimum Payment: The minimum payment for your credit card is the least amount of money you must pay towards your credit card by the due date to remain in good standing with your account.
 
COMPARISON CHART
Features & Special Offers
Cash Back Bonus Feature or Rebates (money back) on the purchases you make
 
Reduced/Low or 0% introductory interest rate and APRs

Cash Advance limit, fee, late fee and other charges

Balance Transfer - 0% APR on balance transfer.

Online fraud guarantees and Internet delivery protection
Online Account Access
Online Bill Payment

Fraud Protection, fraud liability guarantee and Zero Liability

24 hr Cardholder Inquiry Service & Customer service

Over the Credit limit and associated fee

Automobile rental insurance

Travel accident insurance,
Travel-related discounts,
Travel & Emergency Assistance Services

Emergency services,
Emergency Cash Disbursement,
Emergency Card Replacement

Purchase Security,
Purchased price protection,
Product & Additional warranty coverage

Frequent flier miles or Air Miles

Phone-call minutes

Hotel discounts

Gift cards

No cost additional card for family member

Lost/Stolen Card Reporting & Replacement

Best Card designs and look & feel of card

Additional security such as photo on credit card

Year-End Summary Statement

Before applying, understand the agreement and each term and conditions carefully. Read the fine small print. Make sure that the card meets most of your credit need and will serve you well and in a cost-effective manner. Remember even after getting credit card read any notices you receive of changes to your agreement.

Like the rest of your personal finances, your credit activity is unique. With literally hundreds of credit cards available, you can undoubtedly find the right fit for you.

Disclaimer: The material provided below in this section should be used for informational purposes only and in no way should be relied upon for financial advice. Also, note that such material is not updated regularly and some of the information may not, therefore, be current. Please be sure to consult your own financial advisor when making decisions regarding your financial management.

Author: John Peters
Source: Managing Your Finance : http://www.ManagingYourFinance.com/