How to Pick the Perfect Credit Card

What's Hot

2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

With banks fiercely competing for your business, you can choose the best credit card to help you get out of debt or to earn rewards – but not both.

I’ve written hundreds of articles about credit cards, but I still cringe when I think about the time in college when I applied for a card to get a free T-shirt.

In those pre-Internet days, there was little information that was easily accessible about credit cards, other than printed advertisements. Today, there’s so much information about credit cards – from Money Talks News and other sources – that credit card users no longer have an excuse for choosing a credit card on a whim.  I’m very careful about which cards I apply for and use, which allows me to pay very little in fees while earning tremendous rewards.

What kind of credit card user are you?

To pick the best card for your needs, you have to know what type of credit card user you are. According to a groundbreaking documentary from PBS and the New York Times, banks put cardholders into one of two groups: “deadbeats” or “revolvers.”

Contrary to what the name implies, “deadbeats” are actually the customers who pay their balance in full each month, owe no interest, and are unwilling to pay many fees. “Revolvers” tend to carry a balance and pay interest every month, which makes them more profitable, and thus more desirable.

The type of credit card user you are is the most important factor when choosing a card.

Cards for revolvers

If you tend to carry a balance each month, your goal should be to pay off your debt as soon as possible. One thing that will help? Getting a card offering the lowest interest rates. A low APR (annual percentage rate) can come in the form of an ultra-low or 0-percent promotional rate, a competitive standard rate, or both.

For example, many cards feature a 0-percent introductory financing period for as long as 21 months. This rate may apply to balance transfers, new purchases, or both. When considering a balance transfer rate, always consider the balance transfer fee as well, which will typically be 3 to 5 percent of the amount transferred.

The products with the lowest interest rates will rarely offer any rewards. That’s just as well, since those carrying a balance should disregard reward cards – because the value of the rewards earned will only add up to a fraction of the interest paid.  Finally, consider all fees. The best low-interest-rate cards with no reward programs don’t have an annual fee.

Cards for deadbeats

First, congratulate yourself for always paying your balance in full and on time! This achievement entitles you to use credit cards not just as a method of payment, but as a means to earn valuable rewards – so long as you never find yourself spending more to earn them.

Whether you’re considering a card that will earn cash back, points, or miles, you need to quickly determine the value returned per dollar spent. The best cash-back cards will return 2 cents in value per dollar spent, so if you choose to earn loyalty points or miles, make sure the value of the awards earned exceeds 2 percent of what you’re spending.

When it comes to annual fees, remember that lower is not always better. For example, Southwest Airlines offers two different cards, yet the one with the $99 annual fee gives customers $99 worth of Southwest points each year, while the one with the $69 annual fee returns $50 in credits.

Finally, don’t count out the prospect of a generous sign-up bonus. For instance, British Airways offered their card at one point this year with a 100,000-mile bonus, enough for an award ticket to Europe in business class. Before jumping on one of these offers, just make sure that you read the terms and conditions thoroughly and are comfortably able to meet any minimum spending requirements to receive the bonus.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Lookin’ Good! How to Get a Killer Deal on Eyeglasses

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,959 more deals!