Most school-aged children (and that includes young adults) are often warned against applying for credit cards. And for good reason! Too many young people have placed themselves into deep debt due to the fact that they were unaware of how credit cards worked when they got them. While it may sound silly to the more financially-knowledgeable, many young people go spend-crazy, not realizing how much interest-laden money they’ll inevitably owe their credit card issuers.
So why would it be important for students to get credit cards? It’s all about establishing a credit history. Too often, high school and even university graduates complain of never having learned about credit scores during their tenures in school. If you ask us, it should be a mandatory part of high school math classes. Establishing a good credit history is practically mandatory if a person wishes to make important life purchases such as a car or home.
How can a good credit history be established? It’s all about spending wisely. In other words, young people should apply for credit cards and NOT spend money as if they don’t have a limit. Their credit cards should be used just like cash. They should use their cards to pay for purchases that they actually have money for. That way, they’re never truly borrowing. When the bill comes, it should be paid in full and on time.
By doing so, a student will be able to show his/her credit card issuer that he/she can be trusted to pay bills on time. Over time, not only will the credit limit increase but the cardholder’s credit score will improve. Again and to be clear, paying off credit card bills on time and in full is the best way for young people to establish strong credit histories. This is why starting young is important. By the time an individual reaches the age when he/she is ready to buy a home, a strong credit score will come in very handy.
“I didn’t know a thing about credit and interest rates until after I graduated university,” offered one of our colleagues in a conversation last week, “I had to pay back my student loans so I ended up finding a job at a financial institution. In working with cardholders, I discovered just how many people have no idea how to properly use their credit cards. They practically forget what they buy and end up with big bills that are hard to pay off.”
Our colleague learned from his experiences in the business to ensure that when he finally got his own credit card, he would never spend frivolously. Many years later, he was able to secure a mortgage for his condo and buy a car thanks, in part, to the strong credit score he had established over the years. On Vancouver’s News1130.com, it is explained that starting to build a credit history while you’re a student can have many long-term benefits.
“Signing up early can help establish a credit history so you can successfully apply for loans later in life,” says the site. Jeff Schwartz of Consolidated Credit Counseling Services of Canada is quoted in the article strengthening that point. “If you haven’t had any use of credit up until that point, and then once you graduate you still haven’t had any use of credit because you didn’t take on a credit card, you’re going to have a credit profile that doesn’t say anything about yourself,” he says.
At Canadian POS Corporation, we believe that all Canadian merchants should be well aware of the many benefits that credit cards provide their customers. If you’re yet to allow for your customers to pay for their purchases with either credit cards or debit cards, we urge you to get in touch with us so that we can get you started. For more information, give us a call at 1-877-748-2884 or email us at info@localhost and be sure to ask us about both our Countertop and Wireless options.