The Hazards
- A killer APR – If you skip a monthly payment, fail to make a payment on time, or pay less than the minimum payment, you can be socked with a much higher APR, negating the original low- or no-interest arrangement you originally signed up for. Read the fine print in the chart called “Rate, Fee and Other Cost Information.”
- Become a credit risk – Your credit score may be investigated by prospective employers and landlords, and definitely by future lenders. If your credit history is weak, you can be identified as a bad risk, spoiling your chances in the future for loans and other opportunities.
- Rack up debt – You’d be surprised how many students wind up dropping out of college because of debt. It hurts their eligibility for loans, and many have to put aside their studies to work off their debt and pay their other bills. Credit card debt has long-term effects, too. According to the Young Americans Center for Financial Education, people under 24 spend nearly 30 percent of their monthly income just on repaying debt! And much of that can go towards interest. As a result, it’s very, very hard to make debt go away, no matter how hard you work and how much you do to consolidate outstanding balances.
The bottom line? Try to use your card only for emergencies or when other payment methods won’t work. Pay off your balances in full as often as possible. If you can’t, pay more than the minimum, and pay down the cards with the highest interest rates first.