1. A Debit Card Isn’t Always Better than a Credit Card

People often think that they can keep better control of their finances if they use a debit card instead of a credit card. Certainly, that’s what Peter Means thought when he went back to graduate school.

But the New York Times reports that he later lost track of his balance and used the card seven times in one day when he didn’t have the funds to cover the transactions. None of his purchases came to more than $12, but his bank still charged him $34 each time. That’s $238 in a single day’s charges.

2. Check Out a Credit Union Credit Card

For-profit credit card issuers usually make significant income from fees and penalties for late payments and exceeding credit limits. Generally, credit unions either don’t levy these charges or charge much lower rates. Their annual fees are generally cheaper and they often provide longer grace periods.

3. Take an Interest in APRs

The annual percentage rate (APR) is the single most important factor when choosing your best credit card deal–but only if you don’t pay your balance in full every month. If you’re unlikely to incur penalties for late payments or exceeding your credit limit, but you sometimes keep a balance running over a number of months, then you should choose a card because of its low APR.

4. Know Your Credit Card Issuer’s Balance Computation Method

Credit card issuers use different balance computation methods:

• Adjusted Balance
• Average Daily Balance excluding new purchases
• Average Daily Balance including new purchases
• Average Daily Balance double-cycle

According to the Federal Trade Commission, that list is in order of preference, with the best method from a consumer’s point of view at the top. If your credit card issuer uses the double-cycle method, you could end up paying over 400 percent more in finance charges than you would if it uses the adjusted balance method.

5. If You’re Worried about Your Finances

If your personal finances are already in a mess, then you probably won’t be able to get a new credit card. However, if you currently have a good credit score, but are worried that could change soon (and right now millions of Americans are in that position), then you need to shop around for a card with low penalties.

There’s no point in getting a great APR if it’s going to shoot up to something ruinously expensive if you have to skip a payment or exceed your credit limit.

6. Take an Overview

You may have to live with your credit card for many years, so take your time choosing the best deal for you. There’s no single criterion but consider all the factors listed above and a few more–annual fees, grace periods, and rewards programs.

Before you start filling in applications, think how you plan to use the credit card, and calculate how much it could cost you over a year. Be realistic about your likely spending and repayment patterns, and take into account any penalties that you may incur. That’s the only way to ensure that you find the best credit card for your needs

1. Recognize the Problem

Companies that issue credit cards are currently working out how to keep their profits healthy under the new Credit Card Accountability, Responsibility, and Disclosure Act (CARD). And they’ve been:

• Increasing interest rates. making credit card debt expensive
• Slashing credit limits
• Imposing annual fees
• Introducing draconian new penalties for late payments, and other infringements

It’s very likely that the terms and conditions for all your credit cards have changed over the last few weeks and months.

2. Understand How Your Credit Cards Have Changed

You almost certainly have recently received notifications from the issuers of your credit cards, telling you about changes to your terms and conditions. If you’re lucky, these have been mailed to you in their own envelopes. But many companies simply enclosed them with monthly card statements. And most people toss such enclosures into the trash without even glancing at them.

You really need to find those notifications and read and understand them. If they’re lost, then check your credit cards’ web sites or call your issuers and ask them to resend the documentation.

This is important. Associated Press recently reported that one Amex customer’s interest rate has jumped from 6.99 percent to 10.24 percent. Worse, if the customer is late making a single payment, that rate can rocket up to 27.24 percent.

3. Identify the Best Credit Card for Your Usage

The population that carries credit cards pretty neatly divides into two similarly sized groups:

• Those who pay off only a part of their balance each month
• Those you pay off their entire balance every month

Because credit card debt is so expensive, those who are in the first group should always select on the basis of low interest rates. Those in the second, should look for the rewards (cash rewards are usually best) that suit them, along with low or zero annual fees.

4. Don’t Switch Credit Cards Before You’ve Done Some Homework

Don’t burn your boats with one issuer before you’ve lined up another. And don’t apply for another card before you’ve checked your credit score. Just applying for credit can damage your credit.

If your FICO credit score’s under 700, then you’re unlikely to be eligible for any card, and should stay with your current issuer. If it’s over 750, then you can probably get any credit cards you want.

5. Transferring Your Credit Card Balances Isn’t Always Cheap

The L.A. Times has pointed out that balance transfer fees can be up to five percent of the amount transferred, and you have to add that fee to the new card’s interest rate in order to see if switching credit cards makes economic sense. The article gave an example of a five percent balance transfer fee and a new card interest rate of 7.9 percent. For the first year, the cost of the new card would be very nearly 13 percent. That may well not be the best credit card deal for you.

Using these 5 tips can help you make some informed choices about getting the best credit card for your credit situation.