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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!

Healthy competition is making hybrid bank accounts better

Motive Financial, with its chart-topping 4.10% Savvy Savings Account and pending takeover by National Bank, has announced some chequing-like changes to its savings account:

• Unlimited transactions
• Free Interac e-Transfers
• No ATM fees from Motive Financial (although you might still get charged a fee by the ATM provider)

Motive Financial’s website no longer mentions its separate chequing account. This means it now offers a single, hybrid bank account that combines the convenience of a chequing account with the higher interest rate of a savings account.

If this sounds familiar, it might be because of the likes of EQ Bank and Wealthsimple, who recently improved their hybrid accounts as well.

EQ Bank’s interest rate of 4.00% if you configure direct deposit now matches Wealthsimple and no longer expires after 12 months. And Wealthsimple now reimburses fees by the ATM provider, matching a feature that EQ Bank pioneered.

Is a student account relevant for a university student?

Second-year university student Lena M has written an article reviewing her banking needs, and determined that none of her best options are labelled as student accounts. With the number of decent “standard” accounts out there, why bother with a student account that you’ll have to change after a few years? Her requirements include unlimited free transactions, a debit card, the ability to open multiple accounts, free ATM access, a good savings account interest rate, and more. That’s similar to the needs of many adults, student or not!

Lena then followed up with a comparison of bank account features which includes EQ Bank, Neo Financial, Simplii Financial, Tangerine Bank, and Wealthsimple.

Another rate cut but a surprising rate increase

The Bank of Canada made a second key interest rate drop in 2.5 months on July 24, spurring another round of corresponding decreases in savings account and GIC interest rates. Zoom out and we’re only back to where interest rates were at in May 2023, which was a high last seen 17 years ago.

We did a double take, though, when we saw Simplii Financial’s latest new customer promo, which actually got better. It now sits at 6.25% in a savings account for the first 5 months (above 5.90% from its previous iteration), which currently stands out among other promotions.

As a second-year college student, I’ve realized that managing my money can be a challenge. Over time, I’ve figured out what features are most important to me in a bank account. Defining my requirements is a key step, before I even look at what options exist.

I want to try to find an account that I get to keep even after I finish my studies. In fact, the concept of a “student bank account” is not so helpful to make. Some student bank accounts, like with TD, I can only keep until I’m 23; after that I’ll need to open another account that will most likely have monthly fees. I just want an account that meets my needs, now and in the future, whether or not it’s labelled as a “student account”.

Here’s what I’m looking for.

No monthly fees

As a student with limited income, minimizing unnecessary expenses is vital. I always look for accounts with no monthly fees or very low fees. This is important because I don’t want to be charged just for having an account, especially when I’m trying to save as much as possible for other essentials.

Some banks waive these fees if certain conditions are met, such as maintaining a minimum balance. However, I’d rather have an account that does not have a monthly fee even if I only have a few dollars in the account.

Unlimited transactions

A lot of banks limit how many free transactions you can make with their student accounts each month. Take RBC, for example — they only allow 25 free debits a month, including both in-person and online purchases. This might not be a big deal for younger students who don’t spend much, but it can be a hassle for college students.

As a college student, some months I make more than 25 transactions because I pay for transportation, get textbooks, and cover other daily expenses. These day-to-day transactions include debit card transactions, Interac e-Transfers, online bill payments, and more. I might make several small purchases, even within the same day. For example, I might grab coffee or snacks between classes, buy supplies for school projects, and occasionally treat myself to a meal out with friends. These small transactions can surpass 25 in a month quite quickly. Having an unlimited number of free transactions ensures that I don’t have to worry about counting each transaction in order to avoid fees.

If there is a transaction limit, one of the workarounds is to withdraw a large amount of cash just to avoid bank transactions. This is inconvenient as well as unsafe.

Access to ATMs

Access to a network of ATMs is important to avoid withdrawal fees. An important consideration is whether the bank has a large network of ATMs near my home, campus, and other frequently visited locations. Some banks also partner with other ATM networks to provide fee-free withdrawals. This feature is important because as a busy student, I often need quick and easy access to cash. The last thing I want is to be stuck in a situation where I can’t find a nearby ATM and have to pay extra fees just to get cash.

Online and mobile banking

I need comprehensive online and mobile banking options. This allows me to check my balance, transfer money, pay bills, and deposit cheques conveniently from my phone or computer. I rely heavily on the budgeting tools that are offered on some of the mobile banking apps, as they help me manage my finances and keep track of my spending habits. With a busy college schedule, the convenience of handling my banking online is a must. I need to be able to monitor my account in real-time, set up alerts for low balances, and manage my finances without having to visit a physical bank branch.

For example, during exam periods, I barely have time to leave the library, let alone visit a bank branch. Online banking enables me to quickly transfer money to friends for shared expenses or check my account balance between study sessions. Additionally, mobile cheque deposits save me trips to the bank. The ability to handle these tasks online saves me time and stress, allowing me to focus more on my studies.

Chequing, savings, or both

Another thing I look for in a bank account is being able to have two separate bank accounts – traditionally, this means having a separate chequing and savings account. This helps with budgeting. By not having quick access to my savings, it forces me to be conscious about moving money to my chequing account, and also gives me peace of mind in case my debit card is compromised.

I have seen some accounts that are a bit of a hybrid, where you only need one account. This could be viewed as a convenience. However, for now I prefer having two accounts. Therefore, even if I had a so-called hybrid account, I would want the ability to have multiple accounts in order to separate my day-to-day spending from the rest of my money.

Nice-to-haves

Interest rate

I haven’t mentioned interest rate yet. For sure, higher interest is better, and this should become more important over time as I save more money.

Rewards

Some banks offer rewards or incentives for opening an account. This could include cash bonuses, higher interest rates on savings (for a short period), or discounts on certain services. While these shouldn’t be the only factor in my decision, it can be a nice added benefit. For instance, a cash bonus for opening an account can provide an extra financial boost, and discounts on services like movie tickets or dining can help me save money while enjoying college life. Additionally, some banks offer reward programs where I can earn points for every transaction, which can be redeemed for gift cards, travel, or other perks. These extras not only make banking more rewarding but also help me maximize the value I get from my account.

Writing cheques

I have never written a cheque in my life, although I would bet the need will arise at some point. (Or maybe we’ll all look back and laugh at those people who needed to write cheques!) Whether I can get a first cheque book for free or not is not a major decision point for me.

Branch access

My needs don’t require a physical bank branch at the moment. I can foresee some major financial milestones requiring branch access, such as needing a money order for a down payment. However, over time, more and more of these needs can be done online. I am comfortable assessing such needs when I get there.

So… which bank should I choose?

When it comes to choosing a student bank account, it’s really important to think about what I need for my spending habits and financial goals. For me, having unlimited free transactions is a must since I often go over the limits set by some banks. Plus, easy access to ATMs and great online banking are super important.

After doing some research, I am debating between EQ Bank, Neo Financial, Simplii Financial, Tangerine Bank, and Wealthsimple. They all come with no monthly fees, a decent network of ATMs in Canada, and would be suitable for me now as a student and after I graduate. Though these are all online banks, I can still have full access to my accounts, withdraw or deposit money into my account, and access most of the features that the big banks offer. Over time, I anticipate having a relationship with multiple banks in order to access some features that I might only rarely need.

Last month, we asked readers how they feel about interest rates heading back down. 70% of respondents don’t like it, which is unsurprising, since this is a newsletter called the Savers Roundup!

The fallout from last month’s key interest rate cut has continued, with GIC and savings account interest rates continuing to drop. Ontario-only Saven Financial decreased its savings account interest rate from 4.20% to 4.05%; Wealth One Bank of Canada’s drop was from 4.00% to 3.50%. This has left Motive Financial at the top of our comparison chart at 4.10%. Neo Financial and Wealthsimple rank behind Saven Financial at 4.00%.

Will Motive Financial be affected by its new parent company?

The 6th largest bank in Canada (National Bank of Canada) is buying the 8th largest bank in Canada (Canadian Western Bank). Of particular interest (no pun intended) to savers is what will happen to Motive Financial (with the aforementioned market-leading savings account interest rate), which is owned by Canadian Western Bank. In the short term, we have received some good news, as Motive Financial’s Savvy Savings account has added some features typically reserved for chequing accounts: unlimited transactions, free Interac e-Transfers, and free withdrawals at any ATM in Canada. This makes it more similar to hybrid accounts like EQ Bank’s Personal Account and Wealthsimple’s Cash account.

Good news for Hubert Financial’s 1-year quarterly GIC

Most of the forum discussion since Hubert Financial joined Access Credit Union last year has been negative. But Hubert Financial’s popular 1-year quarterly GIC recently increased its rates (with a larger difference than before between each quarter’s rate), which is especially notable since GIC rates have been trending downward elsewhere. The simple average for this GIC is now 5.25%, or 5.35% when compounding is taken into consideration. This would easily top our GIC comparison chart, including Hubert’s own standard 1-year GIC at 4.90%. For those who are unfamiliar with the 1-year quarterly GIC, it offers a different rate every 3 months, and is cashable after each 3-month period. Its current rates are as follows:

• First 3 months: 4.50%
• Months 4 to 6: 5.00%
• Months 7 to 9: 5.50%
• Last 3 months: 6.00%

Quick hits

• Current promotions include a 5.50% 6-month GIC from DUCA Credit Union (Ontario only) and a 5.50% 120-day non-registered GIC from Motive Financial (new deposits only).
• Neo Financial no longer supports American Express bill payments through their bill payment feature