Now that you have started college, credit card companies are going to chase you with an ardor you only wish you could see from your fellow students. To a credit card company, you are their dream date: young, with a clean credit report and (they hope) no understanding at all of how credit cards work. They expect you to accept a credit card with an attractively low introductory rate, run up huge bills, then owe them tons of cash when the introductory period ends and your interest rate skyrockets. Lets disappoint them. The first tip is to ignore the huge, sparkly "0 percent interest" printed in bright red and gold letters on the front of the brochure. Thats nothing but an introductory rate. After a short period, usually just six months, it ends, and now you have to pay the credit cards real interest rate. Student credit cards typically have somewhat higher rates, currently running from about 13 percent to about 20 percent, with default rates that shoot up to about 25 to 31 percent if you pay a bill even a day late. The higher rate is retroactive, so regardless of what the rate was when you bought something, you will be billed at the higher interest rate until you pay your entire balance off. When your interest compounds, you might end up paying two or three times the original cost of an item. The key is to choose a card with the lowest possible regular interest rate, then spend as though you were already paying that rate on your purchases. The fine print or the chart on the back of the form will tell you a credit cards real interest rate. Look for the standard cash advance annual percentage rate (APR) and the standard purchase APR. These are the rates you will really pay. Compare all the student credit card offers you have received, paying no attention to the introductory rates and all the frequent flyer miles or other frills. The only numbers you care about at this stage are the standard purchase APR and the standard cash advance APR. Once you have narrowed the selection down to a few cards with the lowest regular interest rates, search the fine print for gotchas like high default interest rates and annual fees, and eliminate any cards that have them. Now that you have a few likely offers with low interest rates and no nasty surprises, you are free to consider rewards packages and pick the student credit card you like best. Have fun with your new credit card and start laying the groundwork for your future credit... on your terms.
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