Government of Saskatchewan
Tuesday, May 22, 2018
Financial and Consumer Affairs Authority

Many young people get their first credit card during their first year of post-secondary education. When used correctly, credit cards can be very useful for students. They can help build a credit rating, allow you to buy necessary supplies online and can be used in emergencies.

However, when used improperly, credit cards can create large amounts of debt that can take years to pay off. If you want to make your credit card work for you and not the other way around, keep the tips below in mind.

1. Pay your balance on time and in full
2. Don’t share your PIN
3. Not all credit cards are the same
4. Avoid cash advances
5. Add-ons: make sure you understand the costs and benefits
6. Use the card appropriately
7. Read your statement
8. Payment Methods

1. Pay Your Balance on Time and in Full

One of the best habits you can get into is to pay your balance on time and, if possible, in full. If you are able to pay off the full balance and haven’t taken any cash advances, you can actually avoid interest charges entirely. If the amount on the card is too much to pay off all at once you may want to consider creating a monthly payment plan for yourself to follow until the entire balance is paid off. At the very least, always make the minimum payment by the due date. Being late or skipping payments will seriously harm your credit rating.

2. Don’t share your PIN

Do not share your PIN with anyone. If you tell someone your PIN and something happens to your credit card account, you are on the hook.

3. Not All Credit Cards Are the Same

Take time to consider which credit card you want. Different cards have different interest rates, fees and penalties for not making the minimum payment. If you expect to be carrying a balance, it may be worth paying an annual fee for a lower interest rate. Keep an eye out for cards specifically designed for students and compare details like interest rates, annual fees, interest free grace periods and potential bonuses like loyalty programs.

4. Avoid Cash Advances

Avoid using your credit card to take cash out at the ATM or transfer money to your chequing account. Although this may be helpful in emergency situations, remember there is often a cash advance fee, and interest on cash advances is charged immediately.

5. Add-Ons: make sure you understand the costs and benefits

Some cards offer add-ons such as balance protection insurance. Make sure you understand the costs and benefits of them.

6. Use the Card Appropriately

It’s important to remember that having a credit card doesn’t mean you have more money. Purchases need to fit within your budget. If your credit card balance keeps growing month-to-month, you’re likely overspending. 

One of the most common mistakes people make with their credit card is using it to buy “wish list” items. If you find yourself at a checkout counter with your card getting ready to buy $900 worth of clothes or a monstrous TV, take a moment to consider whether you’d be able to buy those things without the card. Though big-ticket purchases might make you happy in the short term, using a credit card to buy items you can’t afford is a slippery slope that often leads to large amounts of long-term debt.

7. Read your Statement

Watch where you are spending money and carefully read through your recent transactions to make sure they are accurate.

8. Payment Methods

With pay options like Apple Pay and PayPal and new gadgets like smart watches, it’s now easier to rack up charges on your credit card. Make sure you monitor your spending so it doesn’t get out of control.

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