Choosing my first credit card: a student’s journey

As a second-year college student, I’m stepping into the world of credit cards for the first time, trying to figure out what features will best support my financial goals. With so many options out there, it’s important for me to choose a card that not only fits my current needs but also helps me build a solid financial foundation for the future. Whether it’s managing day-to-day expenses, staying on top of payments, or even earning a few rewards along the way, I’m learning what to prioritize to make the most of my first credit card experience.

No annual fees

For me, avoiding annual fees is the most important thing. As a student with a tight budget, I should not have to pay any type of fee to have a credit card and I know that most students feel the same way. It’s a minor but important element that helps in my financial management. I remember thinking about a credit card that cost $100 a year, but I quickly realized that this would take unnecessary money out of my budget. I may focus my money on more essential items, like textbooks, food, and saving for future expenses, if I can find a card without this fee.

Of course, I recognize that an annual fee might be worth it if the rewards are substantial and if my spending were high enough to justify the cost. For example, suppose that a credit card has an annual fee of $100 that offers 2% cash back on all purchases. If you spend $10,000 a year on that card, you’d earn $200 in cash back. After deducting the $100 fee, you’d still come out $100 ahead. But right now, I know my spending habits don’t justify the cost. Since I’m not spending enough to fully benefit from those rewards, avoiding the annual fee is the smarter choice for me at this point.

Low interest rates & flexible payment options

My goal is to pay off my balance in full each month. Credit card debt is one of the worst kinds of debt to carry, with the highest interest rates. As a general rule, I don’t want a credit card to change my spending habits; I should not spend more money than I have in my bank account. That said, unexpected circumstances do happen. I look for a credit card with low interest rates because they act as a safeguard in case I ever have to carry a balance. For example, a lower annual percentage rate (APR) guarantees that I won’t be faced with high interest costs in the event of an unexpected emergency. This is essential for handling any short-term financial difficulty without taking on excessive debt. For example, having a card with a lower APR allows me to better handle the cost of an unexpected bill I just received without being overwhelmed by excessive interest.

Being able to conveniently manage my payments is essential given how busy I am with school, work, and life in general. I want a card where I can configure automated payments and get payment reminders. By ensuring that I don’t miss a payment, I will avoid late fees and possible harm to my credit score.

Credit building

Even though I’m still a student, I plan on building a solid credit score, mainly when I consider my future financial goals, such as purchasing a car or renting an apartment. I find credit building tools provided by credit cards to be really beneficial. I search for credit cards that offer monthly credit reports, access to my credit score, and alerts for any alterations to my credit profile. I can keep an eye on my credit situation and learn how my spending patterns affect my credit score. I also appreciate learning resources that provide advice on how to properly handle credit, raise my credit score, and lay a strong financial foundation for the future.

Sign-up bonus & rewards

Although they aren’t the first feature I look for in a credit card, sign-up bonuses are certainly an extra that can have an instant benefit. For example, reaching certain spending goals during the first several months of owning the card may result in a reward. For instance, a card might offer $100 cashback bonus if I spend $1,000 within the first three months. That extra $100 could go a long way in covering essential expenses like textbooks or a portion of my tuition. It’s like getting paid to use the card for purchases I would be making anyway. In addition to cashback, some cards offer sign-up bonuses in the form of travel points or miles, which can be equally valuable if I plan to use them for future trips or vacations. For example, another card I looked at offered 50,000 travel points after a similar spending requirement, which could easily cover a round-trip flight or several hotel stays. While sign-up bonuses aren’t the primary factor in my decision, they certainly add extra value and make it easier to justify regular use, helping to stretch my budget further.

Online interface / mobile app

In today’s fast-paced digital world, having a good mobile app is important when picking a credit card. As a busy student managing classes, work, and everything else, I need to manage my money quickly and easily. A well-designed mobile app that lets me check balances, track spending, and make payments on the go is a must, especially when my schedule is packed.

Another thing I’d really appreciate is instant transaction notifications via SMS or email. These would help me keep an eye on my spending and catch any weird charges right away. Real-time tracking is very helpful, especially when I’m busy and might not notice every transaction as it happens. Plus, having access to detailed spending breakdowns in the app would make it easier for me to see where my money is going and adjust my budget if needed.

Secure login options like face recognition would also be a big plus, giving me peace of mind that my financial info is safe. Overall, having a solid online platform and mobile app isn’t just a nice-to-have — it’s something that would really help me stay on top of my finances and manage my credit card responsibly.

Should I consider debit cards such as EQ Bank and Wealthsimple that give me rewards?

Considering debit cards that offer rewards, like those from EQ Bank and Wealthsimple, is definitely worth it, especially if you’re like me and want to get rewards without dealing with the risks of a credit card. These kinds of debit cards let you earn cashback or points on your everyday spending, just like a credit card would, but without the worry of carrying a balance or paying interest. This is great if you’re sticking to a debit card for most of your purchases but still want to take advantage of rewards.

For example, EQ Bank and Wealthsimple’s debit cards gives you cashback on every purchase, and since it’s linked directly to your account, you only spend what you actually have, which is really helpful for staying on top of your budget. Wealthsimple’s card is cool too because it gives you cashback that can be automatically invested, so you’re starting to build up some savings or investments just by spending normally.

However, keep in mind that using debit cards won’t help you build your credit history. Unlike credit cards, which report your activity to credit bureaus and can help improve your credit score if used responsibly, debit cards don’t affect your credit. So, while you’re earning rewards and managing your money effectively, you won’t be building a credit history, which is important for things like renting an apartment or applying for loans in the future. If building credit is a goal for you, a credit card might be necessary alongside your debit card strategy.

Conclusion

One thing that I’ve noticed while researching about credit cards is that many of them – especially those with the highest rewards and benefits – have income requirements, which can really limit my options as a full-time student with limited income.

So, after weighing all the options and considering what matters most to me as a second-year college student, I narrowed it down to the Rogers Red Mastercard and the Simplii Financial Cash Back Visa Card. They both seem to check most of the boxes I’m looking for. I decided to give the Rogers Red Mastercard a try since I coincidentally use them for my phone plan. It offers a straightforward cash back of 1% but 1.5% when I redeem against my phone bill. But… my application was denied! Off I went to the Simplii Financial Cash Back Visa card, which offers: 4% back on restaurant purchases; 1.5% back on gas, grocery, and drugstore purchases, as well as pre-authorized payments; and 0.5% of all other purchases. I was approved for my first credit card! I’ll be keeping track of how it goes, so stay tuned for another article where I’ll share my firsthand experience!