For many Canadians, the answer to the question “What is the best credit card for a college student?” is something of a mystery.
There are so many cards out there, it can be a challenge to figure out which ones are the best for college students.
College is a time of transition and growth for so many students, and the ability to understand and use credit wisely is a skill they’ll use for the rest of their lives.
So it’s vital they start with a credit card that is geared towards the lifestyle and needs of a college student.
That’s why I put together this post on the best credit cards for a college student in Canada. I run through the positives and negatives of each card, and explain why each one is a good potential match for Canadian college students.
So you’ll be able to decide which card is best for you or the college student in your life.
Sound interesting? keep reading to find out more!
Reasons for Getting a Student Credit Card
Like it or not, a good credit score is an important part of adult life. It’s vital for getting a mortgage, a car lease and other types of financing.
And too often adult in their post-college years spend too much time ignoring or damaging their credit score. So it takes that much more time for them to get it back on track.
That’s why establishing at least some level of good credit while in college will give students an advantage as they head into further adulthood.
And there are more tangible benefits right away for college students who have a credit card. Many online transactions, like reserving a hotel room or renting a car, are only available through a credit card.
So while students might be able to get away with only using cash in certain scenarios, there will likely be times they’ll need a credit card to make a purchase that’s important to them.
Types of Cards
There are a few options when it comes to the type of cards available. The three primary categories are prepaid cards, secured cards, and unsecured cards.
With prepaid cards, you pay the balance of the card upfront. Then whatever balance you pay upfront becomes the max amount you can spend on the card.
The balance is drawn down as you make purchases, and you can reload the card when needed. It’s fairly similar to a checking account.
The drawback is that while you can use a prepaid card for online transactions and other situations where a credit card is required, you don’t actually build up any credit.
This is because you aren’t technically borrowing any money from a lender and then paying them back with your card payments. So you aren’t showing any creditworthiness per se.
A secured card is similar to the prepaid card, with the exception that you’ll be charged a monthly interest rate. This rate tends to be in the 14.8 to 19.8% range and gives the cardholder an opportunity to establish credit.
Finally, there’s the unsecured card. This is the type of card you’d get once you’ve used either of the first two types above. It’s for people who’ve shown themselves to be a responsible credit card holder.
With an unsecured card, you aren’t required to fund the account with your own money upfront. You’ll simply have a maximum amount you can spend on the card, and an expectation that you’ll make the payments.
Cards That Fit the Student Lifestyle
Obviously, no two students have the exact same backstory, spending habits, and lifestyle.
But at least for most college students, there are some elements that many of them will have in common. Everyone needs to pay for food, books, medical bills, etc.
Most pertinent is that college students often don’t have a job, or at least a full-time job. So they aren’t usually looking to get a card with high fees. Given that, most cards marketed to students will have no annual fee.
But beyond that, you’ll want to take a good look at your particular lifestyle in terms of how, when and where you spend your money. This will help guide you to which card suits your needs best.
BMO SPC Mastercards
There are two cards from BMO that are excellent for students: the BMO SPC AIR MILES Mastercard and the BMO SPC CashBack MasterCard.
Right off the bat, the benefit of both cards is they include a free SPC membership. This lets you save 10-15% at participating retailers.
The main difference between the two is that the BMO SPC AIR MILES Mastercard gives you 1 air mile reward for every twenty bucks you spend on the card, and the BMO SPC CashBack MasterCard gives you 1% cash back on every purchase.
So while neither is particularly flashy or offers tons of rewards, they get you cash back or airline miles on the purchases you were going to be making either way.
That’s a nice perk for college students!
Tangerine Money-Back Card
Flexibility when it comes to getting cash back is a highlight of the Tangerine Money-Back credit card. Basically, you choose 2 categories from 10 options, and then you can get cash back from any purchases in those categories.
Some of the typical categories are public transportation, groceries, and restaurants. So if you know where you tend to spend money, you’ll be able to pick the categories that work best for you and get cash back for them.
Another bonus is that if you set up a Tangerine savings account and arrange for your cash-back from the first two categories to automatically go into it, you can add an additional third category on.
But even when you make purchases outside of the 2 or 3 categories you pick, you’ll still be getting .50% cash back on those.
President’s Choice Financial Mastercards
President’s Choice has a slew of cards that are geared towards the college student’s eating habits. Since students are more likely to be stocking up with groceries than hitting the town to eat, these can be a great option.
They are specifically for students who shop at Loblaws-owned grocery stores. These include Loblaws, No Frills, Shoppers Drug Mart, Fortinos, Real Canadian Superstore and more.
The cards (the President’s Choice Financial Mastercard, the President’s Choice Financial World Mastercard, and President’s Choice Financial World Elite Mastercard) all give you PC points for grocery shopping.
These PC points can then be used for items where they sell Presidents Choice products.
The President’s Choice Financial Mastercard gets you 10 PC points for every dollar you spend anywhere. And the other two cards get you 20 or 30 PC points for every dollar you spend at grocery stores where they stock President’s Choice items.
All of the cards offer no annual fees. For each of them, 10,000 points gets you $10 worth of groceries.
Credit Building Cards
As I mentioned earlier, college is a time when you can set yourself up for future success by establishing credit. This is also important for anyone who is new to Canada and plans to build a future here.
But regardless of who you are, part of the transition to adulthood is being able to juggle financial responsibilities, ranging from bills, to investments, to life insurance.
So here are a couple of cards that are great for establishing and building your credit.
CIBC Classic Visa for Students
Like the previous cards we mentioned, the CIBC Classic Visa for students has no annual fee.
Some other benefits of this card are that you can get cash advances (up to $1000) and it has $100,000 common carrier accident insurance.
Another interesting perk is that you can set it up as either an unsecured card or a secured card. That’s an appealing option for people who are looking to start at the secured level and shift to the unsecured level as their credit improves.
Capital One Guaranteed Secured Mastercard
This is another great one for building credit. As the name suggests, it’s a guaranteed card. That means you don’t need any credit history to apply.
It’s a secured card, so you’ll be funding it with money first, and then getting charged an interest rate.
And there’s also a $59 annual fee, which isn’t ideal for a student credit card. But it’s potentially a good trade-off for being able to establish some good credit. Eventually, you’ll be able to move to a card with no annual fee, or an unsecured card.
But for now, you’ll be able to make online purchases and get cash from any ATM worldwide that has the Mastercard logo on it. All the while you’ll be building your creditworthiness.
What is the Best Credit Card for a College Student?
I’ve outlined a few great credit card options that are geared towards college students. So hopefully it answers the question, “What is the best credit card for a college student?” for you.
Obviously, the one that works best for you will depend on your credit history, how you plan to spend your money, and what your credit priorities are at the moment.
But if possible, choose one that can help you build your credit now, so that you’ll be able to make big purchases in the future without having to worry about credit issues holding you back.
And for further info, contact us today!