Credit cards are virtually a must-have these days. With more and more businesses paying wages via direct deposit, and creditors preferring direct debit for their bill payments, it simply makes sense to have a credit card to deal with everyday expenses. Even the argument that it makes no sense to pay interest on everyday purchases no longer holds water - if you manage your finances properly, you'll never have to apply interest to your purchases.



The question most people have is - which is the right credit card to use? With all the different types available, it only makes sense that they each offer unique pros and cons. If you're deciding which card you want in your wallet, here are some rights and wrongs to help you sort through them all.

A Credit Card for Long Term Credit Purchases

Right: Apply for a card with a low APR for those purchases that you'll need to pay off over time. The lower the APR, the less you'll pay out for the item in the long run.

Wrong: Since most low APR credit cards don't offer much in the way of rewards or incentives, don't bother using them on purchases that you'll pay off all in one go each month.

The Everyday Credit Card

Right: Nowadays there are a lot of good reasons to whack your everyday purchases - the sort of thing you'd normally pay for out of pocket cash - onto plastic. Charging all your purchases will make it far easier to track exactly what you spend, and as long as you stay within your budget and pay your account - preferably by direct debit - each month, it won't cost you an arm and a leg to do it. The APR isn't important here, because if you time it right - that's why the direct debit - you won't ever pay interest on the purchases on this card. Instead, go for the option with the highest rewards scheme you can qualify for. Whether it's airline miles, pence off on your purchase, or reward points to spend, there are credit cards that will pay you back for using them.

Wrong: Avoid ones with annual fees and requirements that will cost you more than you'll save on your purchases. Keep your eye on the bottom line - how much will it cost you to get rewarded?

The Kids' First 'Credit Card'

Right: One of the best ways for parents to accustom their offspring to using credit wisely and productively is to give them a credit card - without giving them credit. Prepaid credit cards - make it easy for you to hand over an allowance each week or month - just load it onto their card. They'll learn to manage their spending so that they have money at the end of their month, and you can track their spending through account statements.

Wrong: No credit card at all. Children who grow up seeing their parents swipe their card at the register have very little concept of where the money comes and goes. By being open with them and giving them a prepaid option loaded with the amount that you expect for them to make do, you're starting them off on the road to responsible use of plastic the same way you taught them to ride a bicycle - with you at their side and stabilisers to keep them from falling hard.

You'll find credit cards of all types and sorts at comparison sites, along with all the information you need to help you compare features and benefits of each type. When you're ready to apply, use a good comparison site to sort out all you need to make the right decision.