If you held a gun to someone’s head and told them they had thirty seconds to talk about credit cards, along with peeing their pants, they would say something similar to this:

Using a credit card is basically borrowing money from a lender to pay for things. Sometime later you get a statement in the mail saying what you owe. You have a certain amount of time to scrape together some cashola to pay it back. If you can’t pay it all back on time, then you have to pay interest, which is the way lenders get more money from you. The bottom line: A credit card can be better than cash since you can spend more than you have on you, but you must use it wisely since it’s someone else’s money, and they will want their money back.

Sound simple? Well, sit back with a cold one as we introduce you to Suzie Spendalot, who got more than she bargained for when she got her first credit card.

Intro: Suzie Tries to Get a Credit Card

Suzie Spendalot is an 18 year old college student who loves spending her money on the nicer things in life, like ripped jeans that cost hundreds of dollars. Suzie always wanted a credit card ever since she saw her parents use one. So one day, she goes to apply for one. She sends an application for a Takecash card, which has pictures of ponies on it and a few weeks later, she’s rejected! Suzie throws a tantrum. Poor Suzie.

What happened?  Well, first of all there is a law that prevents people under 21 from getting a credit card. For young, mature adults like Suzie to get them, they need to co-sign with their parents or show they have a job with steady and substantial enough income, like grown-ups. There are cards specifically tailored to college students. You and your personal finance guide should chat about it sometime over some hot cocoa.

Co-signing:  Suzie and Her Parents Get a Card

So, Suzie Spendalot and her parents co-sign to get a student credit card. The credit card lender, Takecash, tells her she should only spend up to $500 every month. This is her credit limit that she can’t go over. Suzie throws a tantrum and says she needs more money than $500 to pay for her sushi outing with her friends. Poor Suzie.

What Suzie doesn’t realize is that staying in her credit limit is very important. When Suzie and her parents co-sign, they all share responsibility for the card. If Suzie spends over $500 a month, then she will get fees for going over, and she’ll also risk hurting both her and her parent’s credit report.

Credit Limit:  Big Spender Suzie

So Suzie starts using her credit card like a big girl. She treats her friends to movies and goes on regular mall runs. Suzie comes home one day to find a serious looking document on the coffee table. DUN DUN DUN! It’s the credit card statement. Suzie opens it up and sees that she spent exactly $500. How convenient for Suzie! She’s not going to get any fees for going over her credit limit. But she doesn’t have $500 on her. How will she pay? Fortunately, Takecash tells her that she only needs to pay $20 in 21 days from now, and she doesn’t even have any interest! Yes, Suzie feels so smart for choosing a card with no Annual Percentage Rate, or APR (APR = interest). Clever girl.

Try ignorant girl. First of all, Suzie should learn how to budget (gotta love The bÜdg) so she can control her spending. Second of all, if a lender tells you that you only need to pay a minimum monthly payment, they are trying to keep you from paying back what you spent for as long as possible.

What a lot of you young whippersnappers don’t realize is that you can pay back every cent you use between the time you get a credit card statement and by the time the bill is due. This time is called a grace period. You won’t get charged interest, or APR. OK, I hear you saying that Suzie doesn’t have an APR. But let’s have a look at Suzie in six months.

APR:  Suzie Notices a Change in her Lovely Card

For six months, Suzie has been crazily using her credit card. Twice she went over her credit limit of $500 and had to pay some fees, but Suzie laughed it off. Other times her parents forced her to use her birthday money to pay off more than the minimum monthly payment. Her parents told her she should try to keep her balance as low as possible, but Suzie didn’t understand. One day Suzie got her credit card statement and thought she saw a strange number next to her debt of $500, but she ignored it. She sent in a check for $20, the minimum monthly payment.

Suzie needs to get her eyes checked out. That strange number she saw was her new APR of 25%. See, Suzie thought she signed up for a card with no APR. In fact, Suzie was fooled by her lender Takecash. She only saw the intro APR, which lasts at least six months. After that, it switches to the real APR, which can be a lot higher. This tomfoolery is called a variable rate APR. Some cards offer an APR that doesn’t change, which is called a fixed-rate APR. (Some cards have a higher interest rate when you miss a LOT of payments. This is the default APR, but don’t worry about that. For now. Muahahaha.) Your personal finance guide can help explain the different APRs to you. But remember, if you pay back all of what you owe before the bill is due each month, you don’t have to worry about an APR. But now Suzie does.

MATH ALERT!!!!!

When Suzie sent in her $20, she thought she was down to $480. Now, when she had no APR, it would have taken her 25 months to pay off $500 if she only paid $20 as her minimum monthly payment each time. ($500 divided by 25 months)

But Suzie now has an APR of 25% since her intro APR disappeared. Do you want to hear a secret? When a company tells you to only pay the minimum monthly payment, the amount usually only covers the APR plus a little bitty amount of your debt. What does this mean for our heroine Suzie?

With her new APR, it will take her 36 months to pay off $500. She will also have paid an additional $213 in interest! Goodbye, sushi outings. Also, this is assuming she doesn’t spend any more money! Then the process starts again, and she’ll pay more interest on more money, and it will take her even longer to pay it all off. Wake up, little Suzie.

Fees:  Suzie Gets Infested by Fees

At the end of the year, Suzie noticed a little surprise on her credit card statement. She needed to pay an additional $100 on her next payment! There goes a big chunk of Suzie’s Christmas money. Where did this hunk of coal come from?

Well, our friend Suzie didn’t notice all the extra fees she had to pay when she co-signed for her credit card. For instance there was an annual fee on the card of $50.

When you apply for a credit card, you gotta read the small print. Otherwise, you’ll have no idea where all these fees are coming from on your credit card statement. Your personal finance guide can help you figure out all the fees on your new credit card.