When the chief executive of Barclays Bank told MPs that he did not borrow on credit cards because they were "too expensive," it should have been taken as a warning for us all. He pays off his cards in full each month, which means he avoids any interest charges – but that doesn’t stop his bank selling credit cards to customers.

30 million people in the UK have one or more credit cards – but there are six million families struggling with debt and MPs blame much of this on the excessive interest charges of credit card and loan companies.

The truth is that the credit card market is so confusing that you have to be careful before you take your pick.

So which is the best credit card?

In short, that depends on what you want to use it for…

The trouble is that companies like banks are not in the business of giving things away for free. They make their billions by taking your money out of your pocket. Rule number one is to decide what you want a credit cart for. The best credit card for one person is not necessarily the best for another. If you have the energy, you could take out several cards to meet different needs.

The explosion in credit card use has led to a vast array of products and now many companies like supermarkets, charities, department stores, football clubs, utilities and so on re-badge credit cards as their ‘own brand’ product.

If it is just as a matter of convenience – that is, if you pay off your credit card debt every month - then you won’t be charged any interest, although there will be an annual fee. If you set up a direct debit arrangement, you’ll be sure of paying off the credit on time and if you choose a card that offers a loyalty scheme (such as points for every pound you spend) you will gain a long-term benefit.

But it you don’t pay it off at once, then you will be charged, so you should choose carefully.

MPs have long been protesting about how confusing the credit card market its. Annual interest charges often aren’t made clear; usually there is no way of comparing like for like because each organisation offers different inducements; and even those promising interest free periods sometimes disguise the fact that this only applies if you spend a certain amount of money every month. Some cards offering an interest-free period have a higher annual charge than those that don’t.

If you are transferring from one card to another and want to move your debt with you, then look for a card offering an interest-free period. You might get up to 60 days without paying interest.

If you shop around you may find that your own card company is offering better rates to new customers than the rate you signed up for years ago. If so, that means that the old customers are, in effect, subsidising the hunt for new ones.

If that’s the case with your card, ask if you can have the rate being offered to the new customers. If you can’t, then move, because there are plenty of alternatives around.

Don’t use it as a cash point card – you’ll pay higher interest than you would on a debit card. And some ‘interest-free’ schemes apply only to the credit on purchases, and not to any cash you take out.

Do use it to buy important things like furniture or electrical equipment. That way you are protected if the goods are faulty.

Consider using a charity card – which means that when you spend, the charity will receive a tiny payback.

Watch out for ‘prestige’ cards like gold or platinum cards. They may come with special benefit like AA membership, free travel insurance or discounts on branded goods; but the annual charge is likely to be a lot higher than for the common or garden card.

The web is ideal for shopping around for credit cards. There are huge numbers of credit cards available, and a large range of comparative websites as well. Our Credit Card sites provide links to a range of credit card companies and brokers (www.uknetguide.co.uk/Finance/Credit_Cards). For general information use www.cardwatch.org.uk

Watch out for fraud

Fraudulent credit card use costs the country more than £1 million a day, which is why banks are introducing PIN numbers (personal identification number) in conjunction with a highly secure chip card. Pretty much all cards will have these facilities within 18 months.

If your card is stolen then you are protected by the UK Banking Code (www.bankingcode.org.uk/) which limits liability for cardholders to £50 in most cases.

Other tips to protect you from fraud:

• Don’t let shop or restaurant staff take your card away.
• Burn or shred receipts.
• Don’t write down your PIN number – and NEVER disclose it to anyone. No reputable organisation will ever ask you to disclose your PIN.