Choose them carefully. Don't choose a card just because of the freebies that come with it or because there's no annual fee. Look for a card that's best for your borrowing habits.

Ask yourself if you expect to pay your balance in full or if you'll routinely carry a balance on your card from month to month, which means you'll be charged interest. Generally speaking, if you expect to pay your credit card bill in full each month, your best bet is a card with no annual fee and with the kind of rebates or rewards that fit your lifestyle. If you don't expect to pay off your card balance in full most months, look for a card with a low interest rate and the right mix of rebates or rewards to justify any fees, including an annual fee.

Also, before you apply for a card, carefully review all other terms and conditions, which must be disclosed to you before you incur any charges on the account. Once you use a card, you have entered into a contract with the card issuer and you are obligated to abide by the terms disclosed to you.

Use them carefully. Credit cards offer great benefits, especially the ability to buy now and pay later. But you've got to keep the debt levels manageable and pay on time. If you don't, the costs in terms of fees and interest, or the damage to your credit score (see Your Credit Score), could be significant. Among the most important things to know and do:

Guard your credit card numbers from thieves. Never provide your credit card numbers — both the account number and expiration date on the front and the security code on the back — in response to an unsolicited phone call, e-mail or other communication you didn't originate. In general, only give your credit card or card numbers to reputable merchants or other organizations, and preferably only when you initiate the transaction.

When using your credit card online, make sure you're dealing with a legitimate Web site and that your information will be encrypted (scrambled for security purposes) during transmission.

For more guidance, see "How to Choose and Use a Credit Card" at www.fdic.gov/consumers/consumer/ccc/choose.html.