A word of caution about those "pre-approved" card offers you get in the mail: You may get an offer for a new credit-card account with a pre-approved credit limit just slightly higher than your balance on your current card. The fine print could reveal an extremely high interest rate and also state that, by accepting the offer, you agree to transfer the entire balance of your other credit-card account to the new, high-interest account. This is a trick, since you would never consciously choose to pay more interest each month. Read everything carefully so that you don't fall into this trap.

And before you toss this offer into the garbage, shred it so that no one can fish it out and try to impersonate you.

No matter what kind of card and plan you choose, you should have access to the following information under the federal Truth in Lending Act so that you can compare one loan to another:

  • Finance charges in dollars and as an annual percentage rate (APR)
  • Credit issuer or company providing the credit line
  • Size of the credit line
  • Length of the grace period, if any, before payment must be made
  • Minimum payment required
  • Annual fees, if applicable
  • Fees for credit insurance (if any), which pays off your loan if you die before the debt is fully repaid

There are lots of different types of cards to choose from. How do you know which kind you want?