Published October 15, 2024 • 8 Min Read
TLDR
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A student or entry-level credit card can be a powerful tool to build your credit history, as well as learn to manage your day-to-day spending and expenses.
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You may have access to a broad range of credit cards, including a number of rewards credit cards that make each dollar work harder for you.
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Applying for a credit card as a student is easy. You can apply in-branch and may be able to apply online.
If you’re a college or university student looking for financial independence, a credit card for students can be a good first step. It is a useful tool for building your credit and helping you with managing day-to-day life expenses while teaching you how to budget and control your spending.
With a wide array of student credit cards to choose from, deciding which one is right for you can feel overwhelming. These five tips can help you get started.
1. Reflect on what you want in a credit card
Picking the right credit card starts with reflecting on your lifestyle. With so many different types of credit cards to choose from, identifying a few “must-have” features can help you narrow down your options and select the right card for you.
To start, think about how you plan to use your card. Will you use it for smaller, frequent purchases, big-ticket items or emergencies? Do you think you’ll carry a balance month to month? If you do plan to carry a balance, you might look for a credit card with a low interest rate to minimize your costs.
Think, too, about the rewards you’re looking for in the ideal card. Do you want to earn rewards for every dollar you spend? Are you looking for special offers or an attractive welcome bonus? Some banks offer welcome points when you are approved. Most credit cards offer additional benefits, such as extended product warranties, mobile phone insurance and insurance on travel and car rentals.
Finally, consider the fees you’re willing to pay to sign up for a credit card. Some premium cards come with an annual fee in exchange for the ability to earn more rewards, while other rewards cards may have no annual fee at all.
Pro tip: Some financial institutions waive the annual fee for students if you open a checking account with them, which can be a great way to save money on fees.
2. Review your credit card options
You likely have dozens of credit cards to choose from. And understanding how different types of credit cards work can help you find the one that’s right for you.
Keep an eye out for these three types of credit cards to make each dollar work hard for you:
Rewards credit cards
Rewards credit cards are appealing for many reasons. There are options without fees and with fee rebates if you have a student chequing account. These cards offer rewards through partnerships with loyalty programs, and you redeem your rewards to buy merchandise, acquire gift cards, pay bills and more. For every $1 you spend, you receive an amount in reward points.
The best student rewards cards go a step further, offering bonus rewards or bonus points on categories where students tend to spend the most, such as dining, gaming, subscriptions and transportation. As a result, a student credit card may help you maximize your rewards from each dollar spent.
Cash back credit cards
If you’re not interested in earning points, consider a cash back credit card. Typically, cash-back programs are easy to understand and allow you to earn cash back on a percentage of your spending. If you want to keep it simple, or you’re not sure when you’d use points rewards, a cashback card is a good first credit card.
Travel credit cards
If you’re already dreaming of your next adventure, a travel card might be the best fit for you. Travel credit cards offer valuable features but often have an annual fee. You can exchange your travel rewards for flights, hotel bookings and more. In addition, travel credit cards can offer travel perks, such as airport lounge access and premium travel insurance for your trip, flight and luggage.
Pro tip: You don’t need to limit your search exclusively to student credit cards. While it’s common for premium credit cards to come with minimum income requirements — which may make them difficult to access for some students — there are plenty of entry level credit cards that may suit your needs.
Looking for a Student Credit Card?
Compare your options and choose the best student card for you
3. Determine your eligibility
The good news is student credit cards and entry-level credit cards are usually very accessible for students. But they still have requirements, and you often must meet all of them for your application to be approved:
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Age: In Canada, age requirements vary by province, but you typically must be 18 or older.
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Residency: If you’re an international student who arrived in Canada in the last 12 months, you can qualify for a Canadian student credit card. Financial institutions might request additional documentation based on their policies. If you’re an international student, please be encouraged to visit a bank branch for personalized assistance.
Pro tip: Most student and entry-level credit cards are accessible to those with little or no credit history. Learn more about how important a credit score is to your credit card application.
If you already have an RBC banking account, you can check your credit score at any time using RBC Online Banking.
4. Understand how credit cards work
It’s important to understand all the features and fees associated with your credit card to avoid any surprises. Generally, you’ll be approved for a credit limit of $500 to $2,000. As your credit builds and improves, credit card issuers may pre-approve you for a credit increase, or you can apply for a higher limit.
Along with the new freedom and flexibility a credit card can bring, it also takes you to a new level of responsibility as you work to establish your financial independence. Maximize your credit card benefits by understanding all its features and using it wisely.
Monthly statements
These provide a summary of your transactions, balances and payments. They include details like purchase dates, the amounts you owe, payment due dates and the minimum payment required to keep your account in good standing.
Get into the habit of reviewing your statements — this will help you stay on top of your spending. It also will show you if any unauthorized charges have been made on the card. Most statements are available through banking apps so it’s easier to keep track of how much you’re spending and there are no surprises at the end of the month.
Minimum payments and interest rates
The expectation is to always pay your balance in full. But if you can’t, you’ll need to make at least the minimum payment — which is usually a fixed amount or small percentage of your total balance — by the due date, in order for your account to remain in good standing.
If you get into the habit of paying the full balance by the due date, you can avoid interest charges. These charges represent an annual interest rate of over 20% on whatever remains unpaid. At the very least, pay above the minimum to reduce interest payments over the long term.
Missing payments
What happens if you don’t pay the minimum balance by the due date? First, you will have to pay interest on the unpaid balance. Second, a missed payment lowers your credit score and negatively affects your credit history — working against your future success instead of building it.
Foreign exchange fees
If you’re on holiday outside of Canada and make a purchase in a currency different from your card’s default currency, most credit cards will have foreign exchange fees. These fees range from 1% to 3% of the purchase amount and are applied to the converted amount.
Learn how to apply for a credit card as a student
Applying for a student credit card can be a very simple process. You can apply online or in person with a representative at your bank, but just make sure you can prove you’re a student.
If you’re not sure what’s the best student credit card for you, visit our Credit Card Selector Tool to help you decide which one suits your needs.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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