Regardless of how much you know about credit and debt, it is an important topic you need to consider and one that affects everyone. Your credit is with you your whole life, so take the opportunity to learn this information now so that you can save money in the long term.
When you owe money, it’s important to understand all the components that go into paying it off in a timely fashion, especially if the money is substantial – like tuition! It’s also important to keep in mind the interest rate, the minimum monthly payments, and the time it will take to pay the balance in full.
Paying the minimum monthly payment on your credit card will still leave you with a good credit rating; but, if you can, it is in your best interest to pay off this debt in full. For example, if you owe $1000.00 on your credit card that has a 19.99% interest rate while only paying the minimum 4% every month, it would take you 74 months to pay off that loan!
The Financial Consumer Agency of Canada (FCAC) has a calculator. You can input your own balance, interest rate, and desired payment and the calculator will indicate the amount of time it will take to pay off your balance.
Everything you need to know about credit
Most of us know that we should avoid accumulating debt, but many people do not know the ins and outs of credit. Knowing your credit score and what it means can be empowering and can help you achieve your future goals. To help you get there, we’ve put together the basics.