The Government of Saskatchewan has released some helpful tips for students regarding the use of credit cards.

Credit cards can be extremely helpful later in life especially when it comes to buying more expensive items like a car or a house. However, they can also become a major issue if not used responsibly and appropriately.

The Government’s tips are:

  • Always make your minimum payments on time – at the very least, make the minimum payment by the due date. If possible, pay off the full balance on time to avoid interest charges altogether.
  • Don’t share your PIN – if something happens to your account and you’ve given someone your PIN, you will be paying the price.
  • Avoid cash advances - there often is a fee associated with this and interest is charged immediately.
  • Read your statements – make sure your transactions recorded in your credit card statements are accurate and check for any unfamiliar charges. Fraudsters can sometimes gain access to your card without you noticing it.
  • It’s not free cash – if you cannot afford to pay off what you are committing to spend on your credit card, think twice before making the purchase.

Ryan Tebbutt, the manager at Kerrobert Credit Union, helps to further explain how to properly use a credit card.

“I think a credit card is a good thing to have, but it’s very easy to accumulate the debt, and is a lot faster than paying it off. Basically, be aware of your limit. I think it’s a good thing to have; to establish a credit rating and so forth, but it shouldn’t be your go-to item to purchase many many items. I still always recommend saving for bigger ticket items as opposed to putting it through a credit card.”

A credit limit should be thought of as a loan extended to you by a credit card provider as opposed to free money to spend. Credit card balances generally come with interest rates. Every time you add to your balance and don’t pay it off in full within the billing cycle, you’ll have to pay that much more in interest. This can make it difficult to get out of credit card debt.

Tebbutt also offers his own advice for students who might be looking at acquiring a credit card for the first time.

“Use it as a backup, you need it for booking rooms nowadays, thing like that. If you don’t have any other credit at all, like say, you don’t have regular loans or a mortgage and so forth, it is a good way to establish a credit rating. So basically, using it sparingly; pay for gas, go back home, pay off the card through your account, things like that. Just actively use it, but also actively pay it off.”

The average credit card debt in Canada is $2,627. Studies suggest around 47%-58% of Canadians pay off their credit cards in full each month. However, one of the studies, by TransUnion Canada, found 39% are uncertain about the benefits of paying off more than the minimum balance.