Five things students should know about getting your first credit card


Applying for your first credit card is a rite of passage for many college and university students. A credit card is a good first step in establishing a credit history and score, which can mean the difference between getting approved or refused for future credit cards, loans and mortgages, rental housing and even jobs. Here are some things you should know about researching, applying for, and using your first credit card:


Do the research

Students as a group are typically bombarded with credit card offers, but don’t sign up for the first offer you see – you shouldn’t base your decision on free t-shirts and Frisbees. Compare rates for student credit cards and identify which type of card you need based on how you plan to use it: textbooks, groceries, rental cars, train tickets home, late-night pizza, etc., and the type of rewards you want in turn. Apply for the card that offers you the best overall value.    


Ask questions

The “best” credit card for you is the one designed to meet your specific needs. Sit down and ask yourself: How do I spend my money? Will this card help build my credit? Can I graduate to a better card in the future? How quickly will I earn rewards, and what are they worth?


When you have little to no income, it can actually be even more important to earn rewards on the spending you are doing. But don’t pay extra for rewards programs – look for no-fee options that have cash-back rewards on groceries or gas or offer points towards free movies. For example, the BMO SPC Cashback MasterCard has no annual fee, offers 1% cashback on all purchases, and entitles you to Student Price Card (SPC) discounts of 10-15% at hundreds of retailers and restaurants to save on everything from clothing and fast food to haircuts and car rentals.


Another option is the StudentAwards MBNA Rewards MasterCard, which earns you one MBNA point for every eligible dollar spent to be used toward cash back, travel, brand-name merchandise, retail gift cards, or charitable donations. Right now, new signups will receive 1,000 bonus points on their first purchase, plus 1,000 bonus points each year on the anniversary date of the credit card account.


Know the facts

When shopping around, be aware of the nuts and bolts: the card’s credit limit, interest rate, fees and penalties, cash advance fees, how the balance is computed and how credit card rewards are calculated. Know exactly how your card works so you can make your card work for you.


Check your credit report and know your score   

One of the most important reasons to use your credit cards responsibly is to build up your credit score.  Simply put, a credit score is a three-digit statistical representation of your creditworthiness on a scale from 300 to 900. The higher your number, the better – the lower it is, the riskier you are in the eyes of lenders. A credit report is a record of your past and present use of credit cards and loans, and can include bill payment history on any internet, cable or mobile phone accounts. You can access your credit report and score through Canada’s major credit bureaus, Equifax and TransUnion.  


Pay it off  

Building a credit history at a young age is beneficial, but whether you’re trying to establish credit, rack up rewards, or both, the bottom line is the same: don’t charge any expense you can’t repay in full when your monthly statement arrives. Ideally, your credit utilization should be below 35% of your available balance. Remember your credit report at least once a year for errors and signs of identity theft. is an independent financial product comparison site that empowers Canadians to make smart financial decisions by comparing rates on mortgages, credit cards, savings accounts and insurance.