While credit cards can be extremely useful, you have to be careful. It's not hard to run up a balance, and there can be hidden fees you won't find out about until it's too late. This section will show you what to look out for.

If you use your card responsibly and read the fine print, everything should be fine.

It's Easy to Get Carried Away
If you are just getting your first credit card, it will be tempting to spend more than you can afford. Actually, it will be very tempting! Credit card companies know this, which is why most student cards have low initial credit limits of $200-600.

Some students get into serious debt problems before they even graduate. The best way to avoid this is to never get in the habit of buying things you can't afford.

Remember, using a credit card is like spending cash, you are just paying the cash at a later date.

High Interest Rates
Your first credit card will likely have an interest rate above 20%. Without a credit history, you are considered high-risk by the credit card company, so you're stuck with a high rate to start. Just don't miss a payment or screw up - the rate will jump up even more!

Think about this: If you put $500 worth of books on a credit card at 18% interest, made monthly payments of $20, and charged nothing else to that card, it would take 2 years and 7 months to pay off that debt. Those $500 of books would end up costing you $619.50!

To sum it up, you really don't want to carry a balance at 20% interest!

Low Introductory Rates
Sometimes, card companies will try to disguise the high interest rate by offering a low introductory rate. This will eventually (sometimes quickly) switch to your normal, high rate. You need to watch out because the company could end the introductory rate without you even knowing.

Unsolicited Offers
If you're a student, remember how you got tons of college brochures in the mail? Well, now those will be replaced with credit card offers. You'll also get them via e-mail.

If you're looking at an online application, be sure that is isn't a fake. Lots of scam artists are setting up fake applications that will allow them access to all of your personal data. Make sure that there is contact information provided and that the website is secure.

Hidden Fees
It's pretty obvious that there will be a late payment fee on your card, but there are other fees you don't even think of. You can get charged for charging over your limit, which will usually be $20-$35, similar to the late payment fee.

Any cash advances will have extra fees, too. That, or they will be subject to a higher interest rate than you normally pay. If you ever get a check in with your credit card invoice, it's usually for a cash advance and has extra fees. Be warned!

Some cards give you the option to pay straight from your bank account. This makes it easier for everyone. However, some card companies will actually charge you $3-$9 for this. That's absurd! You are paying extra to make it more convenient for them.

In The End
A credit card can be a great way to get started building your credit history. However, if you screw-up, it could have lasting affects. Just make sure that you are ready for the responsibility!