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Basic Finances for Youth, Part 4: How to Use a Credit Card

Many of our older youth have told us that they have tremendous challenges with handling money and understanding basic finances. This blog series aims to assist youth with these challenges, offering easily understood information on a range of financial topics from credit cards to banking to loans.  Check out these stats: Approximately 25 million Canadians have credit cards 17% of Canadians feel that their debt is overwhelming 40% of Canadians do not pay their credit card off in full each month 14% of Canadians are surprised by the amount owed on their credit card bill Bottom line: many Canadians have credit card debt that they have trouble getting a handle on. The good news? You don’t have to be one of them! To avoid becoming one of the above statistics, use your credit card wisely. Read this blog to learn more. Here are a few tips on how to use your credit card appropriately:

  1. Pay on time.
  2. Stay below your limit if you can.
  3. Pay the full balance (again, if you can).
  4. If you absolutely, positively, cannot pay the full balance, pay more than the minimum payment.
  5. Keep an eye out for changes in the terms of your account by reading the change of terms notices.
  6. Do not buy more stuff or increase your spending just to get points. Bad idea. It is not worth it since it could actually cause you problems in the long run if it contributes to credit card debt.
  7. Try to avoid taking a cash advance on your credit card because you will be charged interest (more money) from the day you get that advance until the day you pay back the advance in full.
  8. Avoid impulse buys! If you have to pay interest just to afford something, that makes the item more expensive than it actually is! You don’t want to pay more for something than it actually costs, do you?
  9. If you are unable to pay your balance in full and your balance keeps growing that means you are spending more than you can afford and you are going further and further into debt. Stop using your credit card! Get your finances under control before using it again.
  10. Always remember that having a credit isn’t like having extra money. It is not a blank cheque! It does not increase the amount you have to spend.
  11. Try to live within your means. Make a budget and stick to it!

For more info on this blog topic go to: http://www.fcac-acfc.gc.ca/eng/resources/publications/paymentoptions/tscreditshop-eng.asp http://www.moneyville.ca/blog/post/1123767–15-years-to-repay-my-credit-card-no-way http://www.debtontario.com/article.php?ArticleID=11 http://banknerd.ca/2011/07/02/scotiabank-credit-card-vs-line-of-credit/

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