When it comes to buying a camera, you're really spoiled for choice. The range is massive, stretching from cheap and cheerful compact models competing with your smartphone, right through to professional-spec SLRs that cost as much as a decent used car.

In this jargon-free overview, we'll discuss the main types of camera out there, to help you make a wise buying decision. You don't want to pay top dollar for features you won't need, but you also don't want to be stuck with a frustratingly basic camera you'll soon outgrow.

We're going to concentrate on three main types of camera in this overview – compact, compact system (or mirrorless) camera and SLR.

Once you know what type of camera you want, follow the links below to find out which model is best for you:

Compact and bridge cameras

Put simply, compact cameras are cameras with fixed lenses that you can't remove or swap around. It's this end of the camera market that is facing the most competition from camera phones, though the compact sector is actually very diverse.

Many compacts now include advanced features, such as large, sophisticated sensors (the technology inside digital cameras that records light), built-in zoom lenses, even Wi-Fi and GPS technology.

Nikon Coolpix S2800
Nikon Coolpix S2800 – a fun, easy-to-use, point-and-click compact that offers good picture quality for the money

Compact cameras with advanced features are often called power compacts, while those with built-in long lenses and SLR-style designs are traditionally called 'bridge' cameras, owing to the idea that they bridge the gap between compacts and SLRs.

Meanwhile rectangular-style compact cameras with impressive lens focal lengths are usually called 'superzoom' cameras. Bridge cameras are a type of superzoom. Here are some of the key considerations to help you choose the right compact.

Sensor size and resolution

When digital cameras first appeared there was something of a megapixel 'arms race', but consumers now appreciate that there is more to a good camera than lots of pixels on the sensor. Sensor size is actually often more important, as physically bigger sensors mean that the pixels can be larger and this is usually good news for image quality.

A relatively simple camera like the Canon Ixus 150, for example has a 1/2.3-inch sensor with 16 million pixels, the same number as the Fuji X100S. However, the Fuji X100S has an APS-C format sensor, the same size same as many SLRs. You can read more about sensor size here.

Pixel counts can be misleading. For example, the basic Nikon Coolpix S2800, which you can buy for £80, comes with a 20.1 megapixel 1/2.3-inch sensor, while the more expensive Canon PowerShot SX280, 'only' has a 12.1 megapixel 1/2.3-inch sensor. The Canon is the better optical performer, though, thanks to its more powerful lens, better image processing and other factors.

Remember, too, that although more megapixels come in handy in good light, your images can also suffer from more degradation or 'noise' when you use higher light sensitivity settings (ISO). Try to buy a camera with a backlit, or backside illuminated, sensor to reduce the risk of this.

The lens

To help you choose the right compact for your needs, think about what kind of photos you like to take. If you do a lot of landscapes or indoor shots, get a camera with a 'wide angle' lens, equivalent to 24-28mm.

If you like to shoot a lot of portraits, go for a lens with a fixed wide aperture (eg f/2.8) so you can blur the background a little more while keeping the subject sharp, although this isn't always obvious with cameras with small sensors.

Large apertures (small f/number) are also useful if you like to shoot in low light. A bridge camera with a built-in long telephoto lens (20x optical zoom or higher, for example) will be great for photographing subjects from a distance, or for sport and wildlife fans; just make sure the camera has some kind of image stabilizer, either built into the camera or via the lens, to keep shots sharp when you're zoomed right in.

Panasonic FZ200
Panasonic FZ200 – a brilliant all-rounder, offering a long built-in lens with a constant f/2.8 aperture for great portraits and low-light performance

A camera that combines all three is the Panasonic FZ200, whose lens goes from 24mm to 600m equivalent with a constant f/2.8 aperture.

Viewfinder and LCD

Most compact cameras now enable you to compose pictures on the rear screen rather than in a traditional optical viewfinder. Ensure you get a screen that is large and bright and that has at least 460k dots.

Being able to flip and adjust the screen is useful for composition, and many rear screens now offer touch-control functionality to make photography even easier. Rear sceens can be hard to read in sunlight, so try and get one that moves in tandem with the lens if you're interested in a bridge compact.

Size and handling

Simpler compacts are designed to slip in a bag or pocket, and while bridge cameras or superzoom compact cameras are much more compact than they used to be, they tend to be bulkier.

This is an important consideration for young families and travellers, who often don't want to be weighed down with kit, or be seen with protruding lenses that attract the wrong kind of attention.

Extra features

Manufacturers are always shoehorning in new features to differentiate their cameras and justify higher prices, but don't dismiss every advanced feature as irrelevant.

Built-in Wi-Fi connectivity makes it easier to transfer and share images quickly, while if you are getting more serious about creative photography, being able to shoot in Manual mode will give you more flexibility.

The Canon PowerShot S120 offers Manual shooting and Wi-Fi, along with fast and responsive autofocus.

How much should I spend?

A basic, easier-to-carry, point-and-shoot compact with a better lens and more shooting options than your smartphone can easily be picked up for under £100 / US$100 / AU$150. The next step up is a compact camera with 12-20 megapixels for under £250 / US$250 / AU$300, which is more than enough for everyday photography and printing at normal sizes.

A more powerful mid-range compact, usually offering bigger sensors, better quality zoom lenses and advanced shooting options, will set you back around £350 / US$350 / AU$400, while a power compact that rivals an SLR, such as the Canon G16, can be found for around £500 / US$500 / AU$515.

Canon G16
Canon G16 – a high quality power compact with performance to rival an SLR

If you're feeling flush, you can get the Sony RX-1, the first compact camera with a high resolution, full-frame sensor, for £2,500/US$2,800/AU$3000. A full-frame sensor is the same size as a 35mm film negative, measuring 36x24mm.

Anything else I should know?

The pressure from smartphones and interchangeable-lens cameras means you can get some great deals on fixed-lens compacts, so you should be able to find one that also shoots HD video and is within your budget. If you're an adventurous type, or have a young family, a tough and waterproof camera makes sense – try the Panasonic FT5.