Read the fine print. I think the most common now is to charge no interest if the full balance is paid each month. Once you start carrying a balance interest is charged from the time of purchase until payment. APR = annual percentage rate. When compounding monthly the annual rate will be higher than just 12 times the monthly rate.

If you can manage it, don't use your first credit card too much. The interest rate on the first one is likely to suck, so you'd be wise to do as caddis says and not run much of a balance on it, if any at all.

Once you'd had that card awhile, you'll start getting better offers, and you can dump that card for one with a better rate. You'll also be INUNDATED with offers once you graduate, so sort through those and see if there are any deals in there. (Same thing will happen if and when you get your first mortgage.)

BTW, Clark Howard recommends cardweb.com to find good deals on credit cards.

APR is the Annual Percentage Rate, or the interest you will pay per year. Generally, the time is a year (annual implies that: it's from the Latin word for year). At some of the loan shark places, that may not be the case, although I would think using the term APR with any time period other than a year should be illegal, and they should use some other term. But make sure if you're dealing with some kind of payday loan or the like, rather than a major lending bank.

So 9% APR == 9% continuously compounded interest per year (minus any grace period you get on purchases). Note: determining the actual interest on $100 at 9% APR requires calculus: it's not simply 0.09 * $100 =$9.

I think almost all credit cards give you some kind of a grace period with purchase. Meaning, there is some kind of time window, spelled out in the fine print, during which a new purchase will no accrue interest. If the debt is paid by the next billing cycle, no interest will accrue at all. I think it might even be required by law to give that.

Avoid making simply minimum payments, if at all possible. You will end up paying something like 2-3 times the original loan in interest if you do that. A $5,000 balance, with the minimum payment made, takes years and years to pay off, and you eventually pay out somewhere between $10,000 and $15,000 total if I remember correctly.

Note: I am not an accountant.

Wait till you try to figure out how the payoff to a note is calculated.

I use big words like amortization, hedge, and FAS-133 at work, but I can't balance my own checkbook.

I don't have a credit card. Living in debt is in vogue, but it's not as good as living within your means. When you free yourself of debt (student loans or outstanding crdit), the temptation is to plunge right back in.

But listen, the federal government has been making it easier and easier for banks to charge various fees to their indebted customers. Even if you stay right on top of the payments, you'll still get robbed blind by your card issuer.

If you can manage it (it's something I've striven for, found success sometimes, and failed at plenty), you'll find yourself richer without a card.

Someone will say, hey, you can't buy a car without good credit. That's true. But if you spend long enough saving your money and don't accrue costly debt and its attendant monthly fees, you can pay cash for those big things, and often get a massive discount for it.

I will be the first to admit that I'm a hypocrite; living this way is sometimes impossible. But it's the only way to keep every cent you earn, short of investment, which is a big gamble (one open only to the monied -- you gotta spend it to earn it).

And if you don't have a credit card, it's like the government doesn't know you exist. That's how they put together the draft list. Credit cards and Shoney Bear Cub Club memberships.