Choosing the wrong card can impact your finances significantly, but it is also important to the credit card company. You are less likely to get an approval for a credit card that is not matched to your needs.  Credit card issuers have different risk factors and markets... if you are part of their so-called “customer profile” (in other words, their target market), you significantly increase your probability of acceptance!

So how do you choose the right card for you?

Do you know how you plan to use your card?

Consider the following: Are you a student? ...is it for business use? What about your credit... is it good or bad? Are you just beginning to establish credit? ...will you be transferring a balance from another card?

So you may ask, why do I need a credit card in the first place? So here is the answer plain and simple... it’s not that you need credit cards, it’s that you need credit. Good credit to be specific.

Your credit profile tells would-be lenders about your financial responsibility and they use this information to determine if they will extend a loan (or a lease) to you. So, if you plan to buy a car or a home, then your credit is important to you.

It also helps lenders determine the interest rate they charge you for the loan.

For example, if your credit is not so good, you represent a higher risk to the lender, and if the lender is willing to take that risk, they are likely to charge you a higher interest rate.

Credit cards also serve another purpose... security of payment. For example, it is nearly impossible to rent a car without a credit card. There are many other reasons to have a credit card.  Some include online shopping, making reservations (depending upon what you are reserving), booking a hotel or a flight, etc. The list goes on.

The responsible use of your credit card will help you establish and build your credit profile. One of the more commonly used methods of measuring your credit worthiness is the FICO score. About 90% of credit card companies and lenders use your FICO score to help determine your financial responsibility.

You can make purchases in place of a credit card using a debit card. Note that some places do not accept debit cards... such as many (if not most) car rental agencies. However, to build your credit worthiness, a credit card would be the way to go!

If your credit is bad, or not yet established, there are still ways to get a credit card. I suggest getting a “pre-paid” or “secured” credit card.  Yes, you need to pay for them before you use your card and make your purchases, but this will allow you to begin to build, or rebuild your credit. So get a pre-paid card now and begin to rebuild your credit sooner than later!

Just a few words of caution: remember to be responsible! Pay on time... it would be best if you use your credit card only for what you can afford so you can pay it in full each month.

Choosing a credit card is simple as 1-2-3.

(1) Learn. Become educated about the different features

(2) Choose. Find the right card for your needs

After establishing a healthy payment pattern, you can ask your credit card company to raise your limit above the secured amount. If you are really responsible, they may offer it to you! Also remember never to go above your limit! If you pay on time and in full each month, and you do not go over the limit, you won’t incur these fees and you can essentially rebuild your credit at little or no cost to you. Note that your card may have an annual fee associated with your account.

Don't forget to compare fees!  Some card have them, some don't.  Note that some fees, such as late fees, will apply to most any card.  Look at annual fees, new account processing fees (usually found on cards that accept credit risks), balance transfer fees, and over the limit fees.

There may be other fees too, for instance, some have foreign transaction fees and fees for certain types of purchases (such as gambling chips).

Cards that require good credit will often have better deals... such as lower interest, reduced fees, no annual fees, and other perks and rewards.  If you have strong credit, why not take advantage of the better offers?.

Also check interest rates... don't be lured in by low introductory rates if other features of the card do not fit your needs.  Introductory rates are usually for a short time, and the rates can jump pretty high after that period ends.  This may not matter so much to you if you do not plan to carry a balance.

There's no right or wrong when choosing a credit card... just understand the features of each and so you avoid surprises. If your credit card charges high late fees, do not pay late! Remember, having a credit card is a responsibility! Use credit wisely, and it will help you!