Credit card companies target young people, not familiar with credit and the true costs that are associated with using the convenient form of payment. The truth is, using a credit card, without the ability to repay the debt can cost you up to ten times the amount that had been originally charged. The true costs of credit cards can be seen in statements of those making the minimum payment.

First, let’s talk about the interest charges that are accumulated when the credit card is not paid within the initial grace period. Grace periods on credit cards are for a period of twenty to thirty days and allow the credit card user to purchase an item, interest free within the initial grace period.

Credit cards are convenient, but what happens when you find yourself exceeding the credit limit set by the credit card company? Fees of approximately $39.00 are charged to the accounts of most credit card holders, as well as a percentage of the balance. To top this all off, your minimum monthly payment will increase – and over-limit fees will accrue if the balance has not been paid once the next billing period is entered.

Many college students are unaware that being late on even one or two payments can give the credit card company a valid reason to increase the interest rate which has been offered in the past. Are you one of the numerous college students who has seen a rise in their interest rate and wondered why? Late or missed payments could be the culprit for the increased cost of using the credit card on a regular basis. Ensure that all payments are made in a timely manner, in accordance with the due date on the monthly statement to maintain that good credit rating and interest rate on the credit card.

Not only can late payments affect your credit rating, these late payments can also lead to an increased balance due to late payment fees. These fees traditionally range from $19.00 to $39.00 and are added on to the balance of the credit card effective of the past statement in which the payment was late. To avoid these fees, pay the balance on time every month.

Some cards have hidden annual fees which are tacked directly to the opening balance of a credit card. For students, there are many free cards available – lots of which offer rewards, cash back and other loyalty incentives of using the card. There is no reason to be paying for a credit card with all of the free and no-annual-fee options available.  Imagine, maintaining a balance and owing on the credit card even before you had the chance to purchase something! Smart college students say no to annual fees.

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