Youth’s credit life over before it begins

Youth’s credit life could be over before it even begins

Every year thousands of students join tertiary institutions and take the first step
to shaping their future. With this, also come their first steps into the credit
world, enabled by a student card and proof of registration at a tertiary

Students are able to open a student cheque account and even get their first credit card
by using their student cards and proof of registration, along with other
documents as required by legislation. The credit cards are generally issued based on proof of income, which
comes in the form of regular allowance deposits into their bank accounts.

‘It is reasonable and responsible for students to have banking accounts as these
accounts can be used for saving.  What
our youth need to be wary of is accessing credit which they may not be in a
position to handle responsibly,’ cautions Manie van Schalkwyk, Credit Ombud.

According to the National Credit Regulator’s statistics, there are currently 69.53 million consumer accounts. A student card
also enables its holder to open accounts. All that is required is for the student’s parent to confirm that the
student gets an allowance and they could be eligible for an account and some limits
range from about R500 to R1500. Juggling accounts often becomes too much for
students and they land up having bad credit records at credit bureaus.

‘Herein lays a bigger danger. Prospective employers check credit profiles as part of
their security checks and young, newly qualified professionals may lose out on
jobs because they acquired a bad credit record as students as a result of mismanaging
their accounts,’ cautions van Schalkwyk.

Acquiring negative listings as a student not only places youth at a disadvantage when it
comes to employment, but will limit, if not prohibit access to credit in the

The office of the Credit Ombud dealt with a case of a consumer who was newly
graduated.  She was declined when she
tried to open an account, based on negative credit information on her credit
profile while she was a student. ‘In this instance, our decision went against
the consumer as she was listed correctly and fairly,’ adds van Schalkwyk.

‘When dealing with such cases, we have observed that students have a false perception
that credit providers will not hold them fully accountable when they do not
honour their payments as they are still students,’ he continues.

June is traditionally Youth Month in South Africa and is used to highlight issues
facing the youth in this country. In commemorating and celebrating Youth Month,
Parliament hosts Youth Parliament where young people from all nine provinces
meet to debate issues affecting young people.

‘This year, the Youth Parliament’s theme is ‘youth at the centre of economic
opportunities’.  Access to opportunities
and gaining economic freedom starts with managing your finance responsibly,’ he

Van Schalkwyk advises youth on credit:

Do not rush into credit just because you have a part time job

Try and avoid entering into credit agreements and rather save for
your purchases

Always remember how you conduct your credit matters now can affect
your whole future

Avoid taking more credit than you can handle because you rely on
your parents to help pay for your bills – they may not always be in a position
to assist you

If you do have accounts conduct them well as this could help you
get better interest rates when you purchase big assets such  as your first car

Keep a clean credit record so that your future job applications
are not declined based on a bad credit history

Check your credit profile regularly so that you can deal with any
issues timeously – you are entitled to one free credit profile each year

The Credit
Ombud assists consumers free of charge with matters relating to incorrect or
unfair listings.  Contact the office on
0861 66 28 37 for assistance.