Student Credit News and Advice

Credit cards love to dish out teasing promises: “0% interest on purchases and balance transfers for 12 months”; “9.9% fixed APR”; “3.99% life-of-balance transfers!” But these promotional rates are sometimes just a guise; they have little to do with how much a credit card will actually charge you. If you carry a balance on your credit card – even sometimes – the interest rate you pay can make the difference between credit cards being a convenient financial tool and or a personal finance nightmare.

Sorting Out Credit Card Interest Rates

Every credit card has to clearly list its interest rates, fees, and other card member terms – either on the back of a printed card solicitation or on a webpage linked from the bottom of a credit card application page. (Hint: Check the fine print at the bottom). Knowing how to read these credit card terms is critical to finding a credit card that will not rip you off.

When reading credit card terms, you will encounter several different types of interest rates. Here is what they all mean:

Since I have started writing about personal finance, a question I get asked a lot is: “I’m 18 and want to get a credit card. What can I get approved for?” Obtaining a credit card at an early age can be an excellent way to build a credit history that can make it easier (and less expensive) to finance a car or home later in life. Of course, getting a credit card before you understand how credit works can be disastrous. My first piece of advice to anybody thinking about their first credit card is to get it for the right reason. If you want a credit card because you’re thinking of all the things you could buy with the $500, $1,000, or $5,000 credit line it might give you. Stop!