Sensor size/resolution: Don't be dazzled by the megapixel count, as the size of the sensor has a bigger influence on the quality of the images. It's a simple equation; bigger sensors mean that the pixels can be bigger, which usually means better images. The biggest type of compact sensor are APS-C or full frame – click here for a full explanation. Other factors, such as the quality of the lens, also have a strong influence on the final image, so don't get distracted by the megapixel numbers game.

Backlighting: More megapixels can also result in more digital image interference, or noise, when shooting at higher ISO light-sensitivity settings. Try to get a camera with a backlit, or backside-illuminated, sensor, to minimise this.

Viewfinder: Think about how you like to take the picture, too. Composing images via the rear screen is now the norm on lower end compacts, so be aware of this if you prefer a more traditional viewfinder. Ensure the screen is large and bright, with at least 460k dots; being able to flip it out and around is a real aid to composition.

Lenses: You only get one lens with a compact camera, so make sure it suits your needs. We've discussed superzooms, which obviously come in handy for shooting sports and wildlife, and save space when you are travelling. Just make sure there is some kind of image stabilisation built into the lens or camera to reduce the risk of shake when you are zoomed out. Longer lenses also make it easier to blur out the background on portraits while keeping the subject sharp, as do lenses that offer a wider maximum aperture (eg f/2.8). A compact with a 'wide angle' lens, equivalent to 24-28mm, comes in handy for indoor shots and capturing sweeping vistas.

Scene modes vs advanced controls: Many compacts have a plethora of time-saving exposure presets and scene modes, and these are fine for point-and-shoot photographers. If you want to take creative control of your camera and try more advanced photographic effects, it's best to get a device that lets you select and adjust PASM – Program mode, Aperture Priority mode, Shutter Priority (or Tv) mode and Manual shooting mode. For the highest possible image quality, get a compact that shoots in the uncompressed raw (as well as JPEG) format, but be prepared to work on raw images in photo-editing software to get the best results.

Touchscreens and other extras: With compacts facing stiff competition from smartphones and interchangeable lens cameras, many now feature touchscreens and built-in Wi-Fi, even GPS functions. HD video recording should also come as standard, so don't get shortchanged in these areas.

How much will I need to spend?

A basic point and click compact such as the Nikon Coolpix S2800 costs £80/US$249, while a quality superzoom like the Sony Cyber-Shot DSC-HX300 costs £325/US$430. A power compact to rival an SLR, such as the Canon G16, can be found for £420/US$500. At the far end of the scale, the full-frame Sony RX-1 costs £1,600/US$2,800,

Camera jargon explained

ISO: a measurement of the camera's light sensitivity. Higher ISOs mean better low-light shots (and higher shutter speeds) but also increased risk of image interference, or noise

White balance: adjusting white balance lets you remove unwanted or inaccurate colour casts from your images

JPEG and raw: by default, digital cameras will save images in the compressed JPEG format, which saves space, but can lose detail. If you shoot raw you are saving a 'raw' image with minimal processing.

For more information about buying specific compact cameras, click the links below to see our dedicated buyers' guides: