September 10, 2013 | By: Laurie Campbell

As a university or college student, you ought to know the ins and outs of credit card debt.

In an ideal world, university and college students wouldn’t have to worry about credit card debt because they would spend using cash only and put off getting a credit card until after graduation. That seemingly would be the path of smart students, particularly those already saddled with student loans.

It so happens that a generation ago cash indeed was king among the university and college crowd. Not so these days. Economic realities in our digitized consumer age make reliance on credit a virtual necessity. Or put it this way, as a young adult try renting a car – or even a bicycle or a DVD – using only cash. Or try buying stuff online from merchants who haven’t made a buddy of PayPal.

You get the idea. Debt is woven into the very fabric of our society. Look at post-secondary student debt levels. They’ve been on the grow for a long time, now with student debts averaging $25,000 come graduation day. This could be lower if they used a professional budget calculator. By all accounts that curve isn’t going to dip anytime soon. This trend, added to other rising costs - particularly in housing - make credit cards especially attractive to young adults seeking some wiggle room in the way they spend. And just how many post secondary students are holding credit cards these days? Well, I’ve no statistics about college students readily at hand, but a study not so long ago focusing on universities showed that in a sample of more than 15,000 Canadian students completing undergraduate programs, nine in 10 hold a credit card. Some 26 per cent hold two or more credit cards.

Meanwhile another study looking at both colleges and universities revealed that almost 50 per cent of all post-secondary students surveyed believe credit cards are preferable to cash as a convenient way to cover day-to-day expenses leading to student credit card debt. I’m sure credit card companies welcomed this news, for they are always eager to get new recruits from campuses across the land.

As a matter of fact, as I write these words, the credit card companies are feverishly making preparations - inventing forms, building kiosks, designing brochures - for campus promotions that introduce freshmen to the marvels of plastic. It’s not a bad thing, necessarily. As I say, credit cards are practically essential to life nowadays, and they offer great convenience. But, just like cold, hard cash they must be given respect, especially by students of limited financial means.

Just remember, racking up credit card debt early in life is just plain dumb if you can’t afford it. Matter of fact, racking up too much credit card debt at any time of life warrants failing grades. As a student, use your brain. Become financially literate. Track your spending. Know your money habits. Use a budget calculator. And for the time being think of a new credit card as a spending tool of last resort.

Here are a few pointers to keep in mind if you’re a student looking to snag your first credit card:

  • First off, see what credit card services your bank has to offer. Read the literature and don’t be afraid to ask questions. Then check out other bank offerings and make comparisons.
  • A good student credit card should come with no annual fee and an interest rate under twenty per cent. Look for the lowest rates available. Most banks offer credit card services that take into consideration students and young adults.
  • Check out credit card reward programs, which may offer small cash rewards, air miles, or even free tickets to movies. Just be sure the reward extras don’t come with an annual fee and higher interest rates.
  • Don’t be lured by cards solely because they boast dazzling images or come with cool T-shirt or team blanket giveaways to brighten your first week at school, and blind you to the fact that you’re about to be hooked like a trout. Again, judge the card as already advised.
  • Read the credit card contract and/or accompanying printed material in full - including any fine print – before signing anything. If something puzzles you, ask questions, sort it out, or don’t sign.
  • Perhaps the most important point of all, try your best to never carry a balance on your credit card.
  • Come to think of it, get yourself a convenient payment card or travel card. It’s treated just like a credit card by merchants, but it comes with no interest because it draws only from money you’ve already got in the bank, so you never go into debt. You pay only a small fee and enjoy the security and protection features of a normal credit card.
This last point has got me thinking further about how I started off in this blog. I guess the ideal world of spending only by cash is essentially still alive and well – the cash has simply taken the form of plastic. With that I say to all students, here’s to your education, including your financial literacy.


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