While in college, you will receive many credit card offers. The credit card companies will offer you anything from a free t-shirt to free CDs if you sign up for their card. While these offers may be tempting, the real hook is that you will end up with a credit card.

If you decide to sign up for a credit card, select the one with the lowest interest rate both for purchases and cash advances. Read the fine print – it is located in a section called the Schumer box and is often found on the back of the offer. Check for annual fees and other hidden costs. Some cards charge as much as $100 annually for membership fees. Be aware of offers that charge a low introductory rate, but after a few months raise it to a higher level.

Pay on time and in full. Making minimum payments on a $2,000 balance at 18% interest will take almost 13 years to pay in full.

Three types of credit cards:

Prepaid Card

This option allows you to deposit money to put a balance on the card. You do not need a bank account for this type of card. It works just like cash and may be a good option if you have trouble sticking to a budget.

Standard Credit Card

With a credit card, you borrow money for purchases and then pay a monthly interest rate during repayment of your credit card balance.

If your credit card is stolen, under federal law you are only responsible for $50 of unauthorized charges. If you notify your credit card company that your card was stolen before any charges are made, you may not be liable for any charges at all. If the credit card is not physically present when a fraudulent purchase is made, such as over the internet, you are also free from liability for those charges.

Debit Card

Money for purchases is deducted from your bank account. It works just like cash or a check. Be careful to track transactions in a check register or you may exceed your budget.

If your debit card is stolen you are only responsible for $50 of unauthorized charges, but you must notify the debit card issuer within 2 days of its theft or you may be liable for up to $500. If you fail to notify the debit card issuer for more than 60 days after you receive your monthly statement you could be liable for all of the fraudulent charges.