It’s that time of year again when credit card companies and banks are lurking around campus, hoping to get into your spending habits. Other money bandits are out there with gadgets, mind boggling access fees, download fees, subscription fees, usage fees, convenience fees and maintenance fees.
Such charges have made financial institutes rich- four to six per cent of their income is generated by billing service charges to their customers. In 2003, banking charges totalled $723 million in Canada, up from the $528 million reported in 2001. According to the Cost of Banking, a 2004 report by Industry Canada, ATMs, debit cards and credit cards account for 76 per cent of these fees.
Third year student Connie Mills fell into debt last year for the first time in her life.
“It was like being in university meant also being in debt. I still don’t make enough money and I when I need books or rent is due or even when I am hungry, I break out the plastic,” she said.
Mills confesses that she should have never applied for her credit card in the first place.
“It is just too easy to buy now and pay later. It’s a bad idea” she said. “When I cannot meet the minimum I end up paying interest and late fees.”
And if you think your special five-year relationship with your financial institute saves you access fees – think again. A $40 withdrawal from your debit or credit card at your bank’s ATM is fee-free, but a withdrawal at a competitor’s institute costs you $1.50 for their service, and you get charged another $1.50 for using your bank’s card – what has become known as the “convenience fee”.
Credit cards are another way students get into financial distress.