VICTORIA (CUP) ? Think the recent announcement that student debt has reached an all-time high of $13 billion is bad? Well, personal debt, such as credit cards, bank loans, or student lines of credit, which many students are burdened with in addition to their student loan debt, is not even included in that staggering figure.
After a year or two of studies, the money pool can run dry and many students find themselves coming up short when it comes to their monthly expenses.
Student loans often give just enough to cover tuition, and when this happens, daily and monthly expenses are left unaccounted for.
It’s at these times that credit cards or lines of credit become a saving grace for some students.
For someone who is working and has a good credit history, getting the first credit card shouldn’t be a problem. All banks have their own qualifications, and rates may vary, but they tend not to vary too drastically.
?A first-time credit card holder can expect an interest rate of 19.75 per cent,? said Heather Meiklejohn, financial advisor for TD Canada Trust. ?If they qualify for a $1,000 limit, they may choose our lower rate card at prime 6.9 per cent for an annual fee of $25.?
Most students find a way to rack up their cards fairly quickly, no matter their specific limit, until all of a sudden they’re suffocating under a mountain of debt.
How about a student line of credit, then? This is a feasible option for those whose studies make it difficult to work more than a few hours a week, if at all.
Of course, in that case you’ll need a co-signer. Meiklejohn says the minimum credit limit at TD Canada Trust is $5,000.
?A student line of credit is a mix between a chequing account and a Visa,? she said. ?[They] have a minimum payment of just the monthly interest amount while the student is attending school, and then larger payments 12 months after leaving school.?
Students can chip away at the balance of their debt faster by putting a little more than the minimum payment down each month.
Also, don’t be afraid to ask your bank for a lower interest rate at any time, and write down all of your purchases so they don’t get out of hand.
