by Kimberly Palmer

Consumers have more choices than ever. Here's a six-step guide to finding the most useful plastic

Despite their bad rap, credit cards can be one of the most useful tools in your wallet. They can provide identity theft protection, travel insurance, rewards and cash back, and a litany of other benefits, depending on the card. If you carry any debt or have difficulty paying your bills on time, finding a low-interest rate is paramount. Otherwise, for people who pay off their balance each month, the credit card selection process can get complicated.

Here's a six-step guide to making sure you get the most out of your plastic:

1. Find out what your credit report looks like

Gerri Detweiler of says determining your own credit worthiness -- or at least how lenders perceive it -- will help you figure out what credit cards are available to you. You can get your report free of charge once a year from

2.Do a little introspection

Do you carry a balance? Are you trying to consolidate debt? If so, your top priority should be to find a low-interest rate card, says Detweiler. (You might even want to take advantage of zero percent introductory offers, but be sure to check how much the rate can go up later and what the balance transfer fees are.) That way you'll minimize your interest and fee payments. But if you pay off your balance in full each month, find a no-fee card with rewards.

If you are a heavy credit card user, Detweiler says it might pay to use a card with an annual fee and more generous rewards. Most credit cards don't have annual fees, and for most consumers, it's best to find a fee-free one. But if you're spending tens of thousands of dollars a year on it, then an extra hundred dollars or so probably isn't much to you. Using an exclusive, rewards-heavy card can get you all sorts of luxe benefits, from private meet-and-greets with celebrities to luxury hotel stays and access to museums before official openings.

"Finding the best rewards package involves cutting through a lot of noise," says Tim Chen, founder of He recommends boiling down different rewards, from airline miles to points, into a dollar value, and making an apples-to-apples comparison. Then, "choose the card with the highest reward rate," he says. It's difficult to do manually, which is where comparison sites such as NerdWallet come in. (More on that below.)

Curtis Arnold, founder of credit card information site, says you should also consider what, exactly, you use your credit cards to purchase. Some cards offer higher rebates on certain types of spending, such as groceries or gas.

Credit card issuers are also increasingly offering free spending analysis on their websites. If you want assistance getting on top of your budget and would appreciate spending alerts when you start to exceed your pre-set amounts, select a card that comes with this kind of service.

3. Don't limit your options too early

Credit cards today come in many different forms. Options include cash back, travel rewards, zero percent rates, prepaid debt cards, gas cards, and department store cards. Mary Ann Campbell, who teaches personal finance at the University of Central Arkansas and serves as spokesperson for, recommends deciding which categories fit your needs best before narrowing down the field.

When it comes to things like auto rental protection and limited fraud liability (up to $50), almost all credit cards offer the same protection, adds Chen. "Where you start to see big differences are in purchase protection, return protection, and extended warranty benefits," he says.

4. Take advantage of the Internet

Online comparison sites, including,,,,, and make it easy to sift through hundreds of credit cards in minutes. Many of these sites also offer tools such as debt calculators. Arnold recommends also visiting the sites of card issuers themselves, especially after you've narrowed your choices down to a handful of cards. You might find more information or promotional offers.

5. But don't ignore the snail mail

Many attractive promotional offers still arrive though the mail, Arnold says. "At least give them a cursory glance before shredding them," he says. While snail mail offers were more plentiful prior to the recession, a few offers are still delivered.

6. Don't rush your decision

Do your research ahead of time so that you're happy with your card. Opening and closing cards every year until you find the right fit can hurt your credit score. Says Campbell, "Think of your card selection like choosing someone for a long-term relationship. It's not always best to pursue the flashiest person or the flashiest credit card. You want a card that has many attractive and consistent benefits" -- just like a romantic partner.

Kimberly Palmer is author of Generation Earn: The Young Professional's Guide to Spending, Investing, and Giving Back.

Article: © Tribune Media Services

Personal Finance: "Finding the Best Credit Card for You"