Credit Card Basics and Background
Are you feeling inundated with offers? Like most college students
your mailbox is filled with solicitations. Card companies desperately
want new business because the traditional adult market is saturated.
As you know, credit cards make money charging high interest rates,
but what you may not know is that companies also make money from
the merchant that you use the card at! Typically, merchants are
charged between 2.5 to 4.0% which really adds up for card companies.
The best way to wade through the offers is to go straight to the
disclosure box. It tells you annual fees, your interest rate, grace
period, penalty fees and more! It's required by law and it looks
|Annual Percentage Rate
|Balance Calculation Method
||Average Daily Balance
||$15 late payment fee
$15 over the limit fee
2% cash advance fee
of the terms are self explanatory. What is somewhat tricky is "grace
period". The 25 days only applies if you do not have a balance
on your account. Basically, that means that if you have a balance,
you have to pay interest on new purchases right away.
In the next few sections, you will learn how to minimize interest
expenses, qualify yourself for a lower interest rate card, and avoid
common pitfalls students fall into.
Next, we'll explain what good
credit is EXACTLY...