How to make a circle crop photo on Photoshop

In the past, if you wanted to crop an image, you had to resize the image in Photoshop, crop the image to its size, then resize again to get it cropped to your desired size.

This process could take a while, and you would end up with an unusable crop that looks like this: The problem with this image is that the crop is a circle, not a square, and the resulting image has too much of the background color.