Anya Kamenetz

Recently a friend, "Dave," 29, contacted me with a question. He had found a steady job after a period of working part-time and avoiding plastic, and he wanted to re-establish his credit with a new credit card.

His first step, as I might have advised him, was to get a free credit report from the federal government's site, annualcreditreport.com. "What a pleasant surprise!" he e-mailed. "My credit is rated as 'good' and in the B range. What credit card or cards do you recommend I get?"

This is a great question.

Finding the right credit card is about understanding your personal spending habits and financial history.

If you're looking to start your credit history or re-establish credit, like Dave, or if your credit score is currently on the lower end, below 650, you might find it easiest to start with a store card from a department store or anywhere you shop often -- even Amazon.com. Or you can try a secured card, where you put down a set amount of cash as collateral, say $500, and that becomes your credit limit. If you already belong to a credit union -- and there are lots of good reasons to do so -- this should be your first stop for a secured card. If not, Bankrate.com lists secured cards from Applied Bank and Public Savings Bank. After a year making regular payments on a secured card or store card, you should be able to transition to an unsecured card.

If you are paying down debt, you should aim for zero-percent introductory interest rates and no annual fees. These will allow you to transfer your current balance and pay no interest for up to 21 months while you make your debt shrink. Current offers that look good are the Citi Platinum Select MasterCard and the Chase Freedom Visa.

If you pay off your bill every month, without fail, it could make sense to look for a rewards card -- airline miles cards, like the Escape by Discover Card, and cash-back cards like Blue Cash by American Express are among the most popular. However, take note that recent research shows that belonging to a rewards program tends to increase both spending on the card and credit card debt. For that reason, I tend to skip rewards cards and limit my use of credit overall. If you don't want to fall into that pattern, limit your use of plastic to certain predefined expenses -- like business travel, or your cell phone bill.

There's a world of sites out there to help you find the best deals and most up-to-date offers for both the cheapest cards and the most generous reward cards. Among the general guides, Creditcardguide.com and Cardhub.com are especially clear and comprehensive. NerdWallet.com and BillShrink.com are a little more sophisticated. They customize their recommendations as much or as little as you want, based on your average bill, biggest spending categories, and other details of your current spending habits. These sites can estimate exactly how much you'll save by switching. Also check out AskMrCreditCard.com, which publishes annual lists of the best cards.

While looking at these sites with all their offers can be enticing, keep in mind that most people don't need more than one or two credit cards --one for personal use, say, and one for business use. Having too many makes them hard to keep track of and can put you in danger of overspending. Also, if you apply for multiple credit cards at the same time, your credit report can be dinged by having too many inquiries. So shop carefully before you choose.

And a final thing for you and Dave to keep in mind:

Not all credit card companies are equally fair in their dealings. According to the website Consumer Affairs (www.consumeraffairs.com), three credit card issuers made it to the list of companies overall that attracted the most consumer complaints: Chase, Bank of America and Capital One.

Available at Amazon.com:

Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio

Worry-Free Investing: A Safe Approach to Achieving Your Lifetime Financial Goals

Spend 'Til the End: The Revolutionary Guide to Raising Your Living Standard--Today and When You Retire

The Hard Times Guide to Retirement Security: Practical Strategies for Money, Work, and Living

Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back

Happy at Work, Happy at Home: The Girl's Guide to Being a Working Mom

 

Personal Finance - How to Shop Around for the Credit Card That Suits You

© Anya Kamenetz. Distributed By TRIBUNE MEDIA SERVICES, INC.