If you expect to pay your credit card bill in full each month, your best bet is a credit card with no annual fee and the kinds of rebates or rewards you expect to use the most. If you do not expect to pay your credit card balance most months, focus on low interest credit cards (with a low APR) and the right mix of rebates or rewards to justify any fees.

Keep in mind that credit card offers may include a promotional interest rate that increases after six months or so. Also, there may be a low introductory rate that only applies to balances you transfer to your card from other loans or credit cards you have, and not to any new purchases you put on the credit card. Be aware that an interest rate advertised as "fixed" still can be changed with advance notice to credit card holders. If your credit card company does raise your interest rate (APR) for any reason, that new rate usually will apply to any outstanding balance plus new purchases.

If you routinely carry a balance on your credit card, pay closer attention to how your interest is calculated. The most common methods for consumers is the "average daily balance" approach, where you would have a 15- to 30-day "grace period" to pay before incurring charges on the daily average for that period. However, a few credit cards have much costlier calculation methods, including the "two-cycle" system. Under that method, if you pay in full one month but only pay part of the bill the next month, you'll be charged interest for both months instead of just one.

A "pre-approved" credit card offer does not mean that you are guaranteed a credit card. It means a "pre-screening" indicates you may meet the income, employment, and other criteria that the credit card company might want in a customer. You still must apply for the credit card and await the results of a credit check. You are also not guaranteed the credit limit stated in your credit card offer.

Before you sign up for a credit card, carefully review the solicitation and the credit card application. By law, key terms must be disclosed; they are usually described in a separate box somewhere on the application form. If after reviewing these documents you do not understand something, call the credit card issuer and ask for an explanation.

It is a big mistake to assume that interest rates, credit limits, grace periods and other credit card features are pretty much the same no matter which credit card you choose.

You can shop for good deals nationwide, for free. Twice a year, the Federal Reserve Board collects and publishes the interest rates and other terms being offered by many credit card issuers. The Fed makes this information and general shopping tips available on their web site section, "Shop: The Card You Pick Can Save You Money." It's also available by mail (Federal Reserve Board, Publication Services, Washington, DC 20551). Major consumer and financial publications regularly list credit cards and toll-free phone numbers as well.

You should have only a few credit cards. It is good to have more than one credit card, especially if your credit limit is not high enough on one credit card to suit your needs. Experts agree that two or three general-purpose credit cards and a few (if any) credit cards issued by stores or oil companies should be enough for the average family. Having too many credit cards makes overspending too tempting. They also become part of your credit history.

Do not get too deep in debt. If you do have a serious debt problem, there may be corrective steps you can take involving your credit cards. For example, you can reduce your expenses by paying off the balance on your highest-rate credit card accounts first (those that charge the highest percentage of interest), even if you have higher balances on others. Also, you can pay for future purchases using a debit card (see Banking), which deducts funds directly from your bank account. There also are reliable credit counselors you can turn to for help at little or no cost. Unfortunately, there also are scams masquerading as "credit repair clinics" and other companies that charge big fees for unfulfilled promises or services you can perform on your own.

Be careful to pay your credit card bill or you may face interest charges on the outstanding balance plus your new purchases. Do not pay with a check that will bounce (when there is insufficient funds in your checking account), and do not exceed your credit limit or you can end up paying $20 to $30 penalties.

"Cash advances" (such as using your credit cards to obtain cash at an ATM or teller window, or using one of the blank "convenience checks" that credit card companies send to you) can carry sizable up-front fees (often two percent of the amount advanced and not less than $2), which may translate into a higher interest rate than when you normally use your credit card for purchases - plus there is usually no grace period before interest begins accumulating for cash advances. It may be better to write a check from your bank account, use a debit card, or charge normally rather than paying in cash.

If you skip a credit card payment, or pay only the minimum required each month, when you really can afford to pay the balance, you will pay more money in interest charges than necessary (it could add up to thousands of dollars and a debt that takes 10 or 20 years longer to pay than necessary). Also, your credit card company may begin to see you as a higher risk and decide to increase your interest rate (APR).

Credit card issuers are required to give you notice (typically at least 15 days) before increasing your interest rate, lowering your credit limit, adding fees and penalties, reducing or eliminating your grace period or cutting back on bonus programs. Be sure to monitor your monthly billings or other mailings from your credit card company, or you could end up paying more than the original credit card offer, without even realizing it.

Check your monthly credit card statements for overbillings. If there is a problem with your monthly bill, immediately call your credit card company's toll-free number to report the matter. Follow up with a note that includes your name and account number, and details why the charge is incorrect. Send your note to the address designated on the bill for handling errors; do not send it in the same envelope with your payment. If you do not receive an answer or acknowledgement within 30 days, follow up in writing using certified mail for proof of arrival. Keep a copy of all correspondence for your records. And be aware that you are still expected to pay the rest of your bill that is not in dispute. You must report the problem to your credit card company in writing within 60 days of the postmark of the bill.

Take precautions against lost or stolen credit cards. Under federal law, if your credit card or card number is used by a thief, you are liable for no more than $50 per card. If you contact your credit card company before any unauthorized charges are made, you owe nothing.

Never give your credit card number, confidential "PIN" (personal identification number) or similar personal information over the telephone unless you originate the call to someone who you know is legitimate. Save your receipts to compare to your monthly credit card statement. If you receive new credit card applications and blank "convenience checks" that you do not intend to use, destroy them immediately.

Notify your credit card company immediately if your card is lost or stolen, or if you spot something unusual in your monthly billing. If you've been a victim of fraud, see Identity Theft Protection / Identity Theft Prevention (What to Do if Your Identity is Stolen).

If you do not use a credit card anymore, cancel it. Too many cards on your credit record could prompt a lender to reject your application for a mortgage or some other loan. Even if you do not find the credit card of much value, a thief who takes it from your home or wallet can use it fast!

Once you decide to cancel a credit card, take precautions. Send a letter to the credit card issuer stating that you decided to stop the card. This clarifies, for your credit records, that the card was closed by you and not by the credit card issuer because of any problems you may have created. Also, cut up your old credit card and dispose of it in such a way that a thief rummaging through your trash cannot piece it together and get your account number and expiration date.