For tips about credit cards consult the resources below.

• Always make your minimum payment on time
• Don’t share your PIN
• Not all credit cards are the same
• Avoid cash advances
• Add-ons: make sure you understand the costs and benefits
• Use the card appropriately
• Read your statement
• Monitor your spending

 

How credit cards work

Many people get their first credit card during their post-secondary education. When used correctly, credit cards can: 

• be useful for students;
• help build a credit rating;
• allow you to buy necessary supplies online; and 
• 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.

 

Always make your minimum payment on time

It's important to know that being late or skipping payments will seriously harm your credit rating.

One of the best habits is to make your minimum payment on time and, if possible, pay in full. If you are always able to pay off the full balance and haven’t taken any cash advances, you can 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. 

 

Don’t share your PIN

Never share your PIN with anyone.

If you tell someone your PIN or give someone your credit card and something happens to your credit card account, you can be held responsible for any charges that are incurred and your credit card issuer could close your account.

 

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.
• When you have chosen your preferred credit card, make sure you read and understand the terms and conditions of your credit card agreement. It’s important you read the fine print so there aren’t any surprises.

 

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.

 

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.

 

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 refresh your wardrobe with the latest fashion or to upgrade to a monstrous TV, take a moment to consider whether you’d be able to buy those things without the card. Though big 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. 

 

Read your statement

Fraudsters can sometimes gain access to your card without you noticing it.

Watch where you are spending money and carefully read through your recent transactions to make sure they are accurate and remember to check for any fraudulent and unauthorized charges.

 

Monitor your spending

Being easy to use means it’s also easy to rack up charges.

With mobile payment services being available through smart phones and watches, it’s easy to pay for items without physically using your credit card.  Make sure to monitor your spending so it doesn’t get out of control.