TORONTO, ON – As students across the country head back to campus next week, many will be faced with an onslaught of credit card companies lining-up to be the first in their wallets. Consolidated Credit Counselling Services of Canada, Inc., warns students to read the fine print and think about their budgets before accepting enticing credit card offers this semester.
University and college students are desirable clients for credit card companies. They spend a lot of money on things like tuition, books, late night pizza and clothing – often charging these expenses to their credit cards. Students also have high future earning and spending potential. This potential, combined with studies indicating that most people hold onto their first credit for up to 15 years, has credit card issuers aggressively soliciting students.
“Credit isn’t all bad. In fact, when used responsibly, credit cards can help students establish good credit history which can help them get better rates on insurance, rent an apartment or buy a home,” says Jeffrey Schwartz, executive director of Consolidated Credit Counseling Services of Canada. “The key to managing credit is to not get trapped in the mindset of I’ll buy now and pay later. When you do borrow, you want to ask yourself how and when you’ll be able to repay the debt and how much it will cost you.”
Schwartz strongly encourages students to read the fine print of any credit card agreement they are offered before signing. “It’s essential to understand the terms of the contract. Educate yourself and understand the fees for completing a balance transfer, making cash withdrawals, or using a cheque that draws against the account.”
Credit is a loan that must be repaid. With so many young people having access to credit cards these days, the risk of getting into debt trouble is greater than ever. Consolidated Credit can help students avoid these problems with these tips for handling credit wisely:
- Shop around for the best credit card interest rate.
- Don’t pay interest on items you don’t really need, or for things that will be gone by the time you get your bill.
- Read your credit card agreements and the correspondence you get from issuers.
- Always make your credit card payments at least 5 business days before the due date.
- Call your issuers if you can’t make a monthly payment on time. Ask about alternative payment arrangements that won’t damage your credit or raise your interest rate.
- Try to pay off your total balance each month.
- Aim to keep your debt payments at less than 10% of your income after taxes.
- At the first sign of credit card overuse, stop your spending and make your credit card harder to use.
For more information on money management techniques for students and tips for smart credit use, download Consolidated Credit Counseling Services of Canada’s booklet, Budgeting 101: Your Money Guide for Getting Through School.