Applying for too many credit cards can damage your credit rating by having too many inquiries on your credit report. So how do you know which card to apply for?

First of all, you need to think about what you want from your credit card. Is it a lower interest rate? Rewards? A way to track business expenses?

Next you need to be realistic about your credit score. If you haven’t done so lately, get your free credit report and make sure the report is accurate.

Now take a look at the card offers out there and decide which is the most likely to meet your needs. If the offer specifies excellent credit, but your score is only so-so, don’t bother to apply.

If you’re applying for a rewards credit card, make sure that what you will be getting, whether it be cash, points, gas, travel or something else, is worth what you will be paying. This means be sure you won’t be carrying a balance. You’ll probably pay a higher interest rate than you would otherwise. Compare the interest rate you are most likely to get with a rewards card with what you currently have or what is offered on a plain credit card you are considering and think about how much of a balance you might carry. If the interest is too high, you could be losing money. On the other hand, if you don’t carry a balance, a rewards card can be a wonderful thing.

Avoid annual fees whenever possible. Some credit cards will only charge an annual fee if you are not using the card enough or if you don’t carry a balance. Be aware of such terms!

If you must carry a balance, try for a card with an introductory 0% APR for either purchases or balance transfers, depending on which meets your needs. Know when the offer ends and what the interest rate will be later.

In some cases, over the course of a year or several years, a low fixed APR credit card may be a better offer than the 0% APR credit card. Consider how long you will be paying on the balance before choosing a 0% APR card. Do note that not all low rate credit cards remain low rate!

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