A credit card is like an amp for your wallet. It gives you the volume, but screw ups are magnified too. So before plugging in, you should know how to play. We'll help you with the basics, the pitfalls and the advantages so you can maximize your chances of rocking a credit card without it rocking you.

We've all seen credit cards in action. But really, what is a credit card? Basically, it's an agreement with a creditor, like your financial institution, to loan you money to make purchases. You pay back the money in increments, plus interest and fees of course.

For example, say you're starting a band and you want to buy a Fender Stratocaster, but don't have the $600 list price to gear up. A credit card would enable you to make the purchase. You pay more in the end, but the cost is split into payments you can handle. If you are able to handle the responsibility of making the regular payments and paying it off in a short time frame, you will avoid hefty fees from late payments and possible fluctuating interest rates from improper use. Used properly, a credit card can become an effective way to make some purchases.

There are scores of companies out there vying for you to sign up for their card. Offers come from everywhere: in the mail, tables on campus, retailers, airlines and hotels. Shop around, explore your options, and check with your financial institution before signing up. Here are some things you should ask yourself and compare when choosing the best card for you.

• What would you use the card for? Take a serious look at your spending habits.
• Check the annual percentage rate (APR). The APR represents the interest you will pay each year. The same interest rate can be expressed differently as an "effective monthly interest rate," "annual interest rate compounded monthly" or "annual rate in advance." The APR standardizes how interest rates are compared. Remember, there are often additional fees on top of the APR. When shopping around, take note that most cards for students hover between 13 percent and 18 percent APR. This is pretty high considering that savings and short-term CD accounts are only paying two to four percent interest for saving your money.
• Read the agreement closely. Some issuers may offer an introductory rate (a low APR) to entice you and then raise the rate after a limited time or if you are late on just a single payment.
• An annual fee is a basic fee just to have a card. Such fees usually range from $15 to $55.
• Most credit cards offer a grace period of around 20 to 25 days before they start charging interest on purchases.
• Some issuers also offer cash advances with your card. There is usually no grace period and generally heavy fees apply.

So you've charged the $600 guitar to your card; let's say your interest rate holds steady at 13.29 percent. Paying $150 a month, you'll have your guitar paid off completely by the fifth month, having paid about $17 in interest (depending on how your card carrier calculates its fees). Remember, the lower your payment is each month, the higher your final interest payment will be. If you choose to pay only $50 a month, it will take you a little over a year to pay off the loan, but your total interest paid jumps up to $47. So, it pays to pay down your debt as quickly as possible.

Curious about what different deals look like? Use free online calculators at dinkytown.com or bankrate.com to find out how your cards stack up.

Credit card companies offer perks to entice users. These enticements go beyond simple free T-shirts or gift certificates passed out on college campuses. You might be offered store discounts, airline miles, hotel points, cash back or even donations to environmental causes.

Look at the deal itself, not the packaging – weigh the real benefits. Remember these perks come with a price – reward cards often carry higher interest rates and annual fees. Check out cardratings.com and creditcards.com to compare some cards and their perks.

The key to good credit card use is to only buy what you know you can afford to pay off immediately or soon afterwards. Take a look at your income. Is it steady? Make sure you can afford to make payments on time. Snap to reality by tracking your purchases so you're not surprised by bills. Tracking your spending and credit report can also clue you in to possibly suspicious charges – ones that might be the result of fraud or identity theft.

• Credit card issuers make money through interest and fees, so they may provide you with a higher credit limit than you could ever afford to pay off. They may keep your minimum payments low to earn more interest on your payments over a longer period of time. Try to pay off your balance every month; this way you fall within the grace period and can avoid paying interest all together.
• There's no magic number for the right amount of credit cards to have, but it does get harder to track expenses with the more cards you juggle, along with increased temptation to overspend. Also, opening multiple new credit accounts or closing several at once can negatively impact your credit score.
• In addition to paying penalty fees on late payments, falling behind on your bills also hurts your credit score. Your credit score is very important because it's used by lenders to gauge your creditworthiness.
• If you feel you could start to fall behind on your payments, be aware of something called a "universal default clause." It's a stipulation integrated into many credit card contracts. Basically, it says if you are "X" days late on any payment, your interest rate is hiked up and your credit score will take a hit. Scan the fine print of your contract to find out the details of your universal default clause before signing on the dotted line.

Sources: finance.yahoo.com; money.cnn.com; creditcards.com; bankrate.com; fender.com; pbs.org; moneycentral.msn.com; cardratings.com; consumer-action.org; dinkytown.com; demos.org