For many students, a student credit card is a fantastic first credit card. It helps build a credit history, which is valuable for their financial future.
It also offers benefits designed for student life, like making payments convenient and manageable. By using their credit cards responsibly, students can make the most of these opportunities.
With so many options available, students might wonder how to go about choosing the best card for them. Here is what students should know when they apply for a credit card in Canada.
Tips for Applying for a Student Credit Card
Research is key. Taking the time to compare all the different interest rates, fees, and benefits can ensure cardholders choose the card that is right for them.
Make a list of the best student credit cards and apply only for the most suitable card. This can help decrease the chances of getting into too much debt, and it prevents too many hard credit checks, which can negatively impact credit scores.
Applicants may also phone the issuer to find out if they prequalify for the credit card. While this doesn’t guarantee approval, it can show that their credit score and financial information meet some criteria, which can improve their chances of being approved.
Things to watch for include interest rates, annual fees, credit limits, and rewards that suit the student lifestyle. Some student credit cards might offer cash back and no annual fee.
They may also be available to students with a $0 minimum annual income. For students who travel, there are often travel rewards credit cards that offer points on travel and other eligible purchases.
Additionally, students should only apply for an amount they can reasonably pay off. It’s tempting to apply for a higher credit limit than necessary. However, when first starting out, a lower credit limit is the best option.
Student Credit Card Eligibility
To apply for a student credit card in Canada, there are some requirements that must be met.
Applicants must
- Be of the age of majority in their province or territory
- Be a resident of Canada
- Not have declared bankruptcy in the past 7 years
- Currently, I am a full-time post-secondary student in either college or university.
Managing Credit Responsibly
To manage debt responsibly, students should only use cards for purchases that can be paid off in full when payment is due. If this isn’t feasible, try to pay off more than the minimum payment. Paying off only the minimum amount allows interest to accrue, which can significantly increase the amount owed.
Cardholders should also pay the bill on time every month to build positive credit and prevent an increase in interest rates. Staying within the set credit limit and not using credit cards for cash advances from ATMs will prevent additional fees. Finally, stolen or lost cards should be reported immediately.
Researching cards before applying, using the card responsibly, and paying on time are ways students can learn financial literacy, build credit, and establish smart habits for their future beyond school.
