University credit cards

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It’s back to school next week for many college and university students. And the new school year means many ‘firsts’ for students, for some that includes getting that first credit card. But while being approved for “plastic” may be easy, it also comes with a lot of responsibility, and regrets that can follow you for years. Sean Cowan has some tips for first time credit card holders.

90 percent of all university students will have some sort of credit card when they graduate. Jeffrey Doucet is among them.

“I got a credit card to pay for things I could not pay for with my debit and cash, like train tickets home or bus tickets or online purchases.”

“Banks often target first year students and many universities have partnered with them offering cards named after the school; like the McMaster BMO Mastercard.

Banks are hoping students will reman loyal after they graduate.

“We want to build long term relationships with them and this is a great opportunity to build relationships with them as they are starting out and as they move on to the future.”

“When it comes to credit cards for students there are some advantages when choosing one. For example, with the McMaster University credit card, students can either choose a cash back option or collect Air Miles; there is also no annual fees.

“I tried to set it up so that it was paid off every two weeks and tried to quite possibly try to carry a zero dollar balance.”

But not everyone can be so disciplined. Many university students graduate with 20 to 30 thousand dollars worth of debt.

I do have friends that say they are maxed out on their cards and they have 20 dollars in the bank and they are just flying by the seat of their pants.

But only making that minimum payment can be costly.

“The biggest issue is the great evil of compound interest. So you get a credit card and you spend some money, great. But you have to have a plan to pay that off. If you don’t, interest starts to compound and you’re interest payment can be bigger than your actual purchase.”

But good use of a credit card can establish a good credit history. So when graduation day comes, getting approved to buy that dream car or your first home may be easier.

Sean Cowan, CHCH News.