Even after you’ve committed to the safe use of plastic, picking the right card is incredibly complicated.

Start with a single question, and be honest: Do you think you’re going to use the credit card to borrow money over several months, or are you going to pay it off every month?

If you’re going to use a card to borrow, pick the card with the lowest annual interest rate and don’t get distracted by offers for cash back or rewards. That’s because most rewards are only worth a penny or two for every dollar you spend. But for every dollar you can’t pay off, you might have to pay 18% annual interest – or 18 cents for every dollar. So that penny or two of rewards won’t reduce the interest by very much.

Picking the best interest rate seems simple, but it isn’t – many card companies now charge a range of interest rates on a single card depending on how good your credit is. When you apply for a card, the company might charge you 14% or 18% or 22% depending on how good your credit history is.

Even after you have the card, the rate can change for all sorts of reasons. While card companies toss words like “variable rate” and “fixed rate” around to describe their interest rates, it’s best to simply assume that the company can change your rate at any time for any reason. Often, the card company can do just that, according to the fine print in the booklet you get with a new card.

If you’re going to pay the bill off in full each month, then you want
to look for a rewards card that gives you something that
you really value based on the number of dollars you spend.
The interest rate here doesn’t matter, since you’ll be paying your balance off immediately. Cash refunds are simple, and there usually aren’t too many games involved when you call the card company to collect your refund (usually in the form of a check but sometimes a credit on your statement).

Chasing travel rewards, like frequent-flier miles, can be more lucrative, but it isn’t always easy to redeem the things you earn. That’s because airlines control the (small) inventory of free seats, and tons of other people are collecting miles and trying to use them. There are some individual cards now that try to let you have it all and choose between cash, travel and other freebies.

Want to Know More?

• How to Use a Credit Card
• Advice on Getting a Good Credit Card Deal
• Grilling Guide: Questions to Ask Credit Card Issuers