College grads: Top 5 financial mistakes – and how to avoid them

2. Skipping the fine print

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    Ed Ho holds his VISA credit cards at his office in Palo Alto, Calif., May 4, 2011. Young consumers should learn the basics: 1) how a grace period works, 2) what the interest rate is, and 3) when their payment is due.
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Getting a credit card opens doors for college students to build credit history and learn to manage credit. It’s a great financial tool, but only when used responsibly. Most college students neglect to read and understand their credit card terms. I didn’t realize my card’s annual percentage rate (APR) had jumped to 21 percent until I noticed I was paying a whopping $462 in interest a month.

For first-time cardholders, know important information like how a grace period works, what your interest rate is, any additional fees on your card, and when your bill statement is due. When credit cards are used intelligently (like paying off the balance in full and on time every month), it builds great credit. When used carelessly, it’s a credit nightmare.

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