Pick the Best Credit Card for Your Lifestyle

Many people look at credit cards as inherently evil. By tempting people into spending money they don't have, many cardholders have gotten themselves into big trouble by maxing out their cards, only later realizing that they will in fact have to figure out a way to pay them back.

But if you're a responsible borrower, then credit cards offer you a smorgasbord of different benefits. Let's take a look at some of them.

Signing bonuses
Unless you're a pro athlete or in a high-demand profession, you probably have never been offered a signing bonus. But increasingly, card companies are paying high-dollar value rewards tied to spending certain amounts after you sign up.

One of the most lucrative deals available right now comes from JPMorgan Chase (NYS: JPM) , whose Chase Sapphire Preferred card offers 40,000 bonus points if you spend $3,000 in the first three months you have the card. You can use those points to get $400 in cash or $500 toward travel. Similarly, Citigroup's (NYS: C) Thank You Premier card gives you 25,000 points for spending $2,000 within three months, which you can use for $250 in gift cards or $333 in airfare. Moreover, both cards waive their annual fees for the first year.

World travelers
Savvy travelers know that using a credit card can give you a much better exchange rate on foreign-currency transactions than changing money at an airport kiosk or other specialty store. But what many people don't realize is that some cards tack on extra fees for foreign transactions, and those can add up. With Visa (NYS: V) or MasterCard (NYS: MA) charging up to 1% and issuing banks sometimes adding on as much as 2% more, you can end up with a nasty surprise when you get back from your trip.

But an increasing number of cards now waive those foreign transaction fees. Capital One has a long-held reputation for not charging fees for overseas purchases, while Discover Financial also has a universal lack of foreign fees. Both the Chase Sapphire Preferred and Citi Thank You Premier avoid fees, as do dozens of others.

If you're traveling internationally, check with your card company before you go. If you have multiple cards, be sure to use the one that saves you the most on fees.

Meanwhile, even domestic travelers can benefit from the increasing number of airline-linked cards that let you save on baggage fees. If you regularly check your baggage, look at your airline's card offerings to see if the savings justifies any annual fee.

Playing the category game
It used to be that you could easily find cards that would give you 1% of your purchases back in cash rewards. Now, you can get much bigger rewards -- but you have to shop around, because those high rewards are only available for certain categories of purchases, and those categories tend to differ from card to card.

For instance, American Express offers its Blue Cash line of cards. The basic version gives you 3% cash back for grocery-store purchases, 2% for gas and department stores, and 1% everywhere else. But the preferred version, which comes with a $75 annual fee, boosts the grocery cash-back to 6% and gas and department stores to 3%. If you spend a lot in groceries, then the extra annual fee may end up paying for itself.

Other cards from a variety of issuers, including Bank of America (NYS: BAC) , Chase, and Discover, offer savings categories that change throughout the year. For instance, Discover currently offers 5% cash-back on up to $1,500 in gas, movie, and theme park purchases between July and September. Chase's Freedom card has similar 5% rewards for restaurant purchases. But next quarter, those categories will change.

Keeping track of which category is featured at any given time can be a hassle. But for cost-conscious cardholders, the rewards can be well worth it.

Let the banks pay you
Obviously, banks don't offer rewards out of the kindness of their hearts. They profit from merchant-generated fees, and they also want you to spend more. They also hope that you'll buy plenty of things that offer smaller rewards.

But if you're aware of all the benefits you can get -- and these are just a few of the many perks out there -- then a little searching can give you the best card to match the way you spend. That's a nice change from worrying about how much you're paying the banks.

Managing your credit well is an important way to reach financial security, but you also have to have the right investments on your side. Meanwhile, be sure to check out our premium investment report on Bank of America to learn what our senior bank analyst's thoughts are on B of A and the entire banking sector.

The article Pick the Best Credit Card for Your Lifestyle originally appeared on Fool.com.

Fool contributor Dan Caplinger plays the credit card game like a master. He doesn't own shares of the companies mentioned in this article. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Mastercard, JPMorgan Chase, Citigroup, and Bank of America, and has created a bear call spread position in American Express. Motley Fool newsletter services have recommended buying shares of Visa and writing a covered strangle position on American Express. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy gives you the credit you deserve.

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