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Your needs, habits affect card choice

The Baltimore Sun

WALNUT CREEK, Calif. -- In a country where there are hundreds of credit cards to choose from, picking one that best suits your financial needs and lifestyle is no easy task.

There are cards that offer rewards, cards that tout low interest rates and cards that have no annual fees.

January is a busy month when it comes to applications sent out by credit card issuers. That's not surprising, given that many people who used their credit cards heavily in December for holiday shopping may be in the market for a new one.

"We've heard that from card issuers, and we've seen that in our business," said Bill Hardekopf, chief executive officer of, a Web site that helps consumers compare credit cards.

"This is the time that many households get their credit card bill and realize just how much they spent during the holidays. They may look for a new credit card to transfer the balance to a lower rate or because they are close to the limit on their current cards."

Consumers should read the fine print and educate themselves about late fees, minimum payment requirements, cash advance fees and other policies before signing up, experts advise.

"If it sounds too good to be true, you really have to take a look at it," said Noelle Fischer-Herbert, vice president of corporate development at Walnut Creek-based Pacific Service Credit Union.

How current a consumer is in keeping bills paid off is a key factor in deciding what kind of card best suits a person. Those who use credit actively and pay off their balances every month might want to consider a rewards card.

"While interest rates are important, it does not really factor in because they are paying the balance every month, so, in theory, there is no balance to carry the interest on," Fischer-Herbert said.

A rewards card provides points that can be applied toward buying merchandise or services such as airline miles or hotel stays.

"If you want to get something back, opt for a rewards card, but only if you don't expect to carry a balance," said Norma Garcia, a senior staff attorney with Consumers Union. Also consider the annual fee, if any, and interest rate, she said.

Consumers who don't pay off their balances every month should opt for a low-interest-rate card, experts say. That's because a greater portion of monthly payments will go toward paying down the principal.

"Those people need to look at a low-interest-rate card because the interest rate is going to be a very big factor" in their credit card bills, Fischer-Herbert said.

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