I remember the first time I used my credit card to order pizza. All I had to do was give the guy my credit card number and magically pizza showed up at my house.
As a student, I didn’t really have to apply for the credit card.
The card was basically given to me and any other student who filled out a form. I think I even got a t-shirt for signing up. The bank obviously knew that I was a full-time student in Ontario and that I didn’t have much money, but that didn’t matter. They were happy to give me a credit card.
This is how a lot of people get started with credit cards, and if not managed properly this can be the beginning of credit issues. Even though the student credit cards usually have relatively low limits, after a few months of payments, the credit card companies are eager to raise them higher. Since many students don’t have a regular source of income during school it can be extremely difficult to pay-off their credit card balance on time.
I’m not saying that Ontario students shouldn’t have credit cards – there can be benefits. What I am saying is that students need to be careful with how they use their credit cards and make sure that they don’t bite off more than they can chew.
Tips for students and other first-time credit card users:
Treat your credit card the same as cash or debit. This means if you don’t have the money in the bank, don’t spend it.
Always pay-off your balance in full prior to the due date to avoid interest charges.
Avoid the urge to raise your credit limit. Your credit limit should never be more than what you can afford to pay in one month.
If you need larger amounts of money consider other credit options like loans or lines of credit, which have lower interest rates.
Credit cards are not an emergency fund and cannot replace savings. Using credit cards as an emergency fund can cause you to take on more debt than you can afford, which leads to bigger problems down the road.
If you or someone you know is having debt issues – contact us. We’re here to help. With offices across Ontario – we help people with personal debt issues get a fresh start.
