Who Are You?

Using a credit card is a simple form of borrowing. And anyone who borrows money should know a few things about himself or herself before signing any agreements.

You need to consider your life-style and payment style. Are you an impulsive shopper? Are you a bargain hunter? Are you frugal? Spendy? Do you pay your bills on time? Are you not so organized?

There are no right answers to any of these questions. The point is that, as we consider the mechanics of different kinds of credit cards, you should keep in mind what kind of credit user you are. This influences the kind of card you should use.

If you pay your bill in full every month, the interest rate is not going to be as important as other card features, like frequent-flier miles or no annual fee. But if there’s even a remote chance that you might run a balance, you’ll want to focus on finding a card with a low APR.

Next: Interest Rates