Having said that, you do have to be careful when choosing a credit card as an unsuitable card may not offer the benefits to suit you.

Now, choosing a credit card can be made easy if you know what types of credit cards exist in the market, so here’s a brief explanation of the various types to help you choose the one that’s right for your needs.

Balance Transfer Cards: Go in for one of these if you are getting charged a high rate of interest on your existing credit card. They generally offer an interest free period between 6-18 months on your balance transfer. Although these cards are ideal for people who want to save some money on interest, you need to read the terms and conditions to be clear on the particulars such as the length of the interest free period and any annual fee.

Low APR (Annual Percentage Rate) Cards: These cards can come in the form of an introductory low APR rate that goes up slightly after a certain time period, or cards that carry a lifetime low APR. These cards are just right for people who are trying to reduce their monthly outgoings.

Frequent Flyer Cards: These are known also as airline credit cards or airmiles cards and reward the holder with points whenever they make a purchase on the card. These points are accumulated as airmiles and can then be exchanged for flights to the equivalent of the miles they have collected. Foe example the more airmiles you collect, the further you can fly for free! These cards are great for frequent flyers, but do checked for how many miles can be accumulated for every dollar spent, how many minimum miles are required to make a redemption, and finally the time frame within which the miles have to be redeemed.

Rewards Credit Cards: These too enable the cardholder to accumulate points for each purchase on the card, which then can be redeemed. Dependent on the card type this can be a discount on gasoline, entertainment, specified stores etc. Credit card companies team up with product manufacturers for these goodies and the offers keep changing, making this card suited well to those who shop regularly.

Cash-Back Cards: These are another type of reward card but specifically designed for cashback. This is where a small percentage of your purchase is awarded back to you as cashback. The amount of cash that is given back usually ranges from 1-5% depending on the card and the purchases made. This cashback is then given back to you at the end of the month. There’s a great way to benefit from these cards called credit card stoozing. Best suited to those who clear their balance in full each month.

Secured Credit Cards: These type of cards are secured by a deposit and generally used for those who have a poor credit history and would like to begin to repair it. Such cards can only be used for purchases equal to the amount of the deposit. Alternatively, some companies may accept a personal asset as collateral instead of a cash deposit, but be careful when considering this type.

Prepaid Credit Cards: These are just like any other prepaid item, just like a mobile phone prepaid scheme. You pay the amount up front and can use the card until the balance is used up, after which you have to top up the balance again. These cards usually do not carry any financial charges but may carry a small annual fee.

Business Credit Cards: These cards are just right for small and medium business owners who can use these cards exclusively for business purposes. Generally these cards come with a high credit limit and allow a business owner to keep his personal and business expenses separate. Of course, these cards often carry the usual benefits such as low introductory APR, rewards, benefits etc.

Student Cards: These cards teach students on how to go about building a good credit history, and can really help the creditworthiness of students in later years provided they use the cards wisely. As such these cards do not carry the frills of other cards such as rewards.

This is just a brief introduction to the types of credit cards you can find in the market today. There are a few common rules you should think about regardless of the card type you are looking for. Firstly you should think carefully about the type of credit card that will suit you best. Secondly, be responsible. Don’t overspend and stay within your financial limitations. Finally make certain you maintain your payments. If you run into trouble at any point make sure you let your provider know. They will be happy to help you out rather than have you miss a payment!

You can read more about the types of credit cards available here.

Gary is the Editor of Think-CreditCards.com, The consumer orientated credit card comparison site designed to help you find the perfect credit card while avoiding high interest rates, charges, and fees!

If you often travel for business, then you probably stay in the same chain of hotels, use the same rental car company and fly on the same airline. Am I right? If so, you could potentially save your company thousands of dollars each year in travel expenses or earn free travel for you or your family. Many issuers have credit card offers that are affinity based with many of the service providers that business travelers frequent. If this is the case – get a travel rewards credit card! With each business trip purchase you earn points, sometimes double points or more, towards free hotel stays, free airline flights, free car rentals and more! If you earn enough points, you can earn a combination of all three for a vacation that has virtually no travel expenses.

If you travel a lot for personal pleasure, then you can probably relate to your business counterparts who also tend to frequent the same hotel chains and airlines. If this is the case, then you should get a travel reward credit card too! By earning points that can offset or even eliminate most of your travel expenses, then you can afford to spend an extra day with family or friends or you even take that extra little trip to visit that “hidden” destination. Either way, you’ll be glad you did because you earned it by making purchases with your travel rewards credit card.

Whether you’re a business traveler or travel for personal pleasure; take advantage of all that credit card issuers have to offer. Travel reward credit cards can give you the flexibility to choose how you’ll be rewarded on your next trip.

Now don’t get me wrong, credit cards are not the ultimate financial evil. Used correctly, they can be a great asset. You just need to limit how many cards you get, and how you use them. Just as importantly, you should get a card that fits your needs. If you are going to use a credit card, you might as well get the most out of it that you can.

Rewards cards are best for this. For example, if you are going to school far away from home, and will be flying back and forth, you may want to get a rewards credit card that offers sky miles, or adds to your current frequent flier miles. If you are going to school closer to home, or commuting, you’ll probably want to consider a gas rewards card. Other rewards credit cards that are issued these days are hotel rewards, retail rewards, travel rewards, or even cold hard cash.

Don’t just jump at a rewards credit card just because of the reward it offers, you’ll also want to look at interest rates, fees, penalties, and all the fine print. Rather than rewards, you may want to reward yourself with an introductory 0% interest rate, these are usually interest free for the first six months. Just make sure you can still handle the payment once the interest kicks in. All to often I come across people who maxed their cards out during the interest free period, and were unable to keep up the minimum payment once the interest free period was over. Keep in mind too that 30% of your credit score is based on how much you owe, and 35% is based on how you pay your debts, i.e., on time, 30, 60, 90, and 120 days late.

Many companies offering credit are also looking at your debt to credit limit ratio so it’s very important to refrain from maxing out your credit cards. They look at it like this: Let’s say I have three credit cards each with a $5,000 limit. On the first card I have $1,000 charged to the card, on the second I have $3,000, and on the third, I have $1,500. Should something happen to my source of income, I still have access to $9,500 to carry me through a rough time. Now lets say I only have one card with a $1,000 limit and $500 charged to the card. Even though my debt to income ratio is great, if something happens to my income, I only have $500 to help me out, so the credit card will probably get maxed out, and the payment not made. The credit card companies can preach all day that a good debt to credit limit ratio shows responsibility, but they couldn’t care less whether or not you are responsible in the use of your cards, just as long as you continue to make payments to them.

One occasion when you might want to hold off on canceling those older credit cards is when you plan to apply for a major loan. Major loans include such things as a home loan, car loan, boat loan, or other loans in excess of a few thousand dollars.

The reasoning behind this is that closing credit line accounts, especially those that you paid on time and in full, can actually lower your credit score.

Paying down accounts that still have a balance is important to your credit score, but simply closing paid off accounts will not help you improve your credit score at all. As mentioned above, canceling a large amount of unused credit may actually hurt your overall credit score.

You may be saying to yourself: That doesn’t make sense!

Here is how this works. It has to do with how credit bureaus calculate your score.

The reporting agencies use many different factors when figuring out your credit score and one of the factors that they use is the total amount of debt you have on your credit cards and the revolving accounts that you have divided by the total amount of debt available on those accounts. Once these calculations are done, a number less than 1 (one) will occur.

This fractional number is one way they use to judge your credit worthiness. The lower this fraction is the better. To help you better understand this, if the resultant number was exactly 1, then that would mean that your outstanding debt is equal to your available credit and you would be at the maximum level, or maxed out for credit.

For example, if you had $5000 in current debt and you had $15,000 in your various credit lines, you would divide $5000 by $15,000 and you would get 1/3. This means you are currently using 1/3 of the credit that is currently available to you.

To take this a step further: If you cancel an old credit card that has a $5,000 limit (but no current balance owed on it) you will still have the same $5000 in current debt (see above example) but you only have $10,000 in your credit lines (as compared to the $15,000 mentioned above). When you do the math you come up with the fraction of ½. In other words, you are using ½ of the credit that is available.

Keep in mind that the closer you get to the number 1, the less attractive you are for future credit.

The best advice for anyone contemplating a home or auto loan is to keep the credit lines that you have until after you have finalized the loan itself. Then it is safe to cancel the card.

If you are not planning a major loan activity and the balances on your old cards is zero, go ahead and close them out. This will not hurt your credit score.