Get your free stuff!

Free CD’s, T-shirts, mugs, hats; They’re all yours and they’re all free if you sign up for a credit card.

Sounds great, doesn’t it?

Free swag and your very own credit card. So what should you buy first? Maybe some jeans to go with your new t-shirt, or how about a stereo to play your new CD? On second thought, why don’t you buy it all? After all, you can pay for it later, right?

Wrong.

Each year young adults across Canada fall into the credit card trap. It’s easy to operate under the “buy now, pay later” mentality, but a few impulse purchases now can lead to costly mistakes over time.

According to a 2008 study by the Financial Consumer Agency of Canada, 6 in 10 Canadians between the ages of 18 and 29 had some credit card debt, and at least half of those reported their debt load to be “more than they can handle”.

72% of young Canadians have credit cards. However, most of them are unaware of the problems they can face if they don’t monitor their usage.

Credit card companies can raise your credit limit without your consent. So you should always be aware of how much you spend. Don’t assume if you have a $500 limit you’ll be declined if you reach it. The company may have raised your limit to $3000 causing you to spend more than you intended.

You also need to be aware of interest rates, as they can add up quickly if you don’t pay your monthly balance in full.

For example, let’s say you owe $1000 and you only make the minimum monthly payments. At an interest rate of 18%, it would take you 12 years to pay off your bill.

Don’t let flashy cards with your school crest or the logo of your favorite sports team and free stuff be your financial downfall.

Remember, what you do today affects tomorrow. Careless use of credit cards now can seriously damage your credit rating in the future. This will make it very difficult to buy a car, rent an apartment, start a business, start a family or buy your first house.

Spend smart!