Young Adults: First Credit Card

Hi,
When young adults apply for their first credit card, they need to be aware of hidden costs and fees, interest rate fluctuations, and the minimum payment trap. If ever it's the time to read the small fine print on the back of forms, applying for a credit card is when to do it. No one should feel embarrassed if he or she does not understand all the verbiage on the back of one of those forms. It's important to ask someone who does understand to explain all the terms and conditions to the prospective card holder. Here is a list of some of the items typically included in the small print:
1) If payment is late, by even one day, the interest rate may rise to the maximum allowed by state law in which the card is issued. For example, if the card is offered at 6% and the payment is one day late, the credit card holder reserves the right to reserve the interest rate to 19.9%+.
2) Most credit cards assess a $35.00 additional fee for any payment that is late.
3) If the credit limit is exceeded by even a penny, a $35.00 fee is assessed.
4) On many cards, when only the minimum payment is made, the principal is not reduced at all and only interest is being paid. Paying only the minimum payment is the start of falling into the minimum payment trap.
Tomorrow I will write more about the minimum payment trap.
Until then,
Alan