Many of the people holding 242 million bank credit cards are paying too much for them, consumer advocates say.

The key to choosing the right credit card is to do a little comparison shopping. That means investigating not only local banks and savings and loan associations, but also credit unions, national bank issuers or even non-bank issuers such as AT&T.Financial institutions that issue credit cards make their profit from card holders in two ways: through annual fees and through the interest paid on outstanding balances.

In general, if you pay off your card's balance each month, you should shop for the card with the lowest annual fee.

Most financial institutions charge no interest to consumers who pay off their entire balance each month. The standard "grace period" for not charging interest is 25 days.

Today, it is easy to find a no-fee bank credit card. But double-check for a grace period on the card. Beware of financial institutions with no fees on cards that actually start charging you interest from the moment you make a purchase.

Be realistic about this. Look over your past statements and see that you really did pay off your balance, and not that you just hope to be able to pay it off in future months.

If you are one of the two-thirds of bank credit card holders who usually do not pay off your entire balance each month, you need to worry about interest rates.

Consumers who carry a high monthly balance should choose a card with a low interest rate. For example, if your average balance is $1,000 and you have a card with a 21 percent rate, you are paying $210 in interest annually. On a card charging 13.9 percent interest, you would be paying just $139 a year.

The key to making the right choice of cards is to compare annual fees and interest rates.

- Find out what annual fee and interest rate you are paying on your current card.

- Determine your average monthly balance by looking at several recent statements.

- Investigate what the lowest interest rates available are from other card issuers.

- Subtract the best rate you can find from your current rate.

- Multiply the difference times your average monthly balance to find your probable savings in interest from the new card.

Next, compare the annual fees. If the new card's lower interest rate comes only at the price of your paying a higher annual fee, make sure the difference in fees is not greater than your potential savings in interest.

Many financial institutions also are offering prestige MasterCards or Visa cards, typically called "gold" cards. These cards feature not only higher credit limits and special perks, but also higher fees.

On the other hand, the "gold" cards usually come with lower interest rates than regular cards.

But for most people, the gold cards are not worth it, consumer advocates say.

If you need a higher credit limit, you can usually just ask to have the limit raised on your regular card.

You must decide if it is worth paying twice as much in annual fees to impress your clients. And before being swayed by all the enhancements offered with the card, make sure you'd really take advantage of them.