Interest Rates and Fees

Interest Rates:
In the world of credit the interest rate being charged is based on the creditor's perception of the risk that they won't get paid. When you get your first credit card you don't have a personal credit history, so the interest rate you're charged will probably be high. Probably not as high as they would charge someone with bad credit, but still high. Maybe as much as 29.0% and that's a lot.

"Teaser" Rates:
A common sales pitch is to offer a low rate of interest for a limited time. The credit card companies are "banking" that you will still owe them money when it runs out and you can be charged the "regular" rate. Make sure you know what the regular rate is. It may be as high as 29.0%.

Annual Fees:
Many credit cards charge "membership fees" ranging from $25 to $100 a year. Annual fees are actually "interest" you pay before you buy anything. Shop around. There are many cards available that do not charge you for the "privilege" of carrying them.

Late Payment Fees - There are nearly always fees for making a late payment. And late is based on when the payment is received by the creditor something over which you have almost no control. Late fees are sometimes as high as $35.00. In addition, a late payment usually revokes any "teaser rate" you may have and begins charging the regular rate AND if this late payment goes on your Credit Report the interest on the other credit cards you have could to go up too.

Over Limit Fees - Some credit card companies wouldn't consider embarrassing you by declining your charge while you are out for a nice dinner. No, as a favor to you they prefer to charge you a fee (between $15 and $40) for being allowed to exceed your credit limit. Hope it was a nice dinner.

Cash Advance Fees - If you use your credit card to get cash from the ATM you will probably pay a cash advance fee of 2% to 4% of the advance. Plus interest which may be at your accounts regular rate, and is sometimes even more.