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8/25/2009

Orientation Week: FCAC advises students to be aware of debt traps and encourages them to increase their financial knowledge

OTTAWA, August 25, 2009 — Orientation Week begins soon at colleges and universities across the country, and thousands of young Canadians will be facing decisions not just about courses and living accommodations, but also about matters that could impact their long-term financial health.

Today's orientation weeks for first-year students feature not just information from faculties and students' clubs, but more and more enticing offers for everything from discounts on gym memberships and tanning salons, to cell phone plans and credit cards. In many cases, students will be asked to enter into contracts to obtain these services.

Before signing a contract, it is important to understand the difference between the short term and long period. Companies selling products and services often offer special discounts or additional services for “free” for an initial period. For example, a cell phone company may offer texting or e-mail services without charge for the first three months of a new contract, but after that period, full premium charges apply. Many are surprised when the bill arrives for that first month of daily text messages at full fees.

To ensure students and other Canadians can make informed decisions, FCAC has made available the tip sheet Before You Sign Any Contract: 10 Things You Need to Know. This tip sheet includes useful advice to keep in mind before signing a binding contract with providers of goods and services.

Learn how to manage your finances

For many students, first-year college or university is the first time they will be living away from their families, and the first time they have the need — and the opportunity — to make financial decisions that can have long-term impacts on their lives. In particular, many will have to deal with handling a credit card for the first time.

“If you do not use your credit card carefully, you could pile up more debt than you can handle,” says Ursula Menke, Commissioner of the Financial Consumer Agency of Canada (FCAC). “It’s easy to use cards for impulse, ‘must-have’ purchases like the latest electronic gadget or clothing. Instant gratification feels terrific, until the credit card bill arrives. So it is important to understand the difference between what you want and what you really need.”

Help on the Web

FCAC's website (www.fcac-acfc.gc.ca) provides a range of tools and information to help people develop financial literacy: the ability to understand, analyze and use information about financial decisions in day-to-day life. The website includes an interactive Credit Card Comparison tool and quizzes to help people measure their own financial knowledge. It also offers The City, an interactive, Web-based learning tool aimed at helping youth acquire crucial financial know-how (themoneybelt.gc.ca).

“With the financial services world growing more complex, Canadians are at risk of making costly mistakes with serious long-term consequences,” Ms. Menke says. “But learning financial literacy skills and developing good financial habits when they are beginning to make those major decisions can help young Canadians ensure they have healthy finances for life.”

Also, engaging publications such as Making a Budget and Sticking to It as well as How to Beat that Debt will helps students take control of their finances by learning how to avoid living over their means, and finding out how to put needs before wants.

FCAC Commissioner, Ursula Menke, will be available this week to answer questions from media.

About FCAC

FCAC fosters greater understanding of financial services in Canada through its consumer education materials and interactive tools. It provides accurate, objective information about financial products and services, and informs Canadians of their rights and responsibilities when dealing with federally regulated financial institutions. In addition, through its financial literacy programs, FCAC helps Canadians increase their financial knowledge and confidence in managing their personal finances. FCAC also ensures compliance with the consumer protection laws, and monitors codes of conduct and public commitments that apply to banks and federally incorporated trust, loan and insurance companies.

You can reach us by phone through our toll-free Consumer Contact Centre at 1-866-461-3222 (our TTY number is 613-947-7771 or, toll-free, 1-866-914-6097), or by visiting our Web site at www.fcac-acfc.gc.ca.

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Media relations:

Sylviane Desparois
Manager, External Communications Officer
613-941-4990
sylviane.desparois@fcac-acfc.gc.ca

Amélie Sirois
Communications Officer
613-941-1526
amelie.sirois@fcac-acfc.gc.ca