You're older now, and your financial needs are growing. It's not convenient to carry pockets full of cash for every time you attend a social event, go on a shopping trip or even have an emergency, like a flat tire.
In this article
- How do student credit cards work?
- Benefits of a student credit card
- Things to look for in a student credit card
- Credit card statements
- Getting started with your card
A credit card, unlike a debit card, is like a small loan from the bank. When you purchase something, the money doesn't pull automatically from your bank account like a debit card would. At the end of your billing cycle, you'll receive a statement, listing out all of your purchases, and how much you owe.
If you can't pay off your total debt for the month, you'll still need to pay at least the minimum payment. The rest of your debt will then be carried over to your next billing cycle and you'll need to pay the interest on the unpaid amount. All credit cards come with a credit limit on how much you can spend each month.
Student credit cards are great cards when you are starting out, because they tend to have little to no credit score requirement. They're designed to help students establish their credit history and build credit. Student credit cards work very similarly to other types of credit cards, but they're easier for students to qualify for and often don't have a minimum income requirement to apply.
Once you start using and paying off your credit card, you can begin building your own credit score.
When looking for the right student credit card for you, you want to compare interest rates, fees and rewards. While many student cards don't include rewards or benefits, some do — and you'll want to find a credit card that rewards you in a way that complements your spending.
Student credit card rewards
The Scotiabank® Scene+™ Visa* Card (for students), has no annual fee with an annual interest rate of 20.99% on purchases and is one of the few rewards cards that allows cardholders to earn on everyday purchases and redeem points for movies, travel, shopping and more fun stuff. You can earn two Scene+ Points for every $1 spent at participating grocery stores, Home Hardware, in Cineplex theatres and online at cineplex.com, and one Scene+ Point for every other $1 spent elsewhere1. These points can be redeemed for movie tickets, travel, or some of your favorite store gift cards. Here's how to make the most of your credit card rewards.
Scotiabank American Express® Card (for students) is another rewards card that offers students accelerated Scene+ points for selected participating stores and merchants plus a host of other benefits without any annual fee. You earn up to 3X Scene+™ points on eligible grocery, dining, and entertainment purchases plus earn 1 Scene+ point for every $1 spent on all other eligible everyday purchases. You can redeem these points when you use your card and book travel through Scene+ Travel or can choose from a wide selection of merchandise and gifts by visiting sceneplus.ca.
Credit card fees to consider
A good student credit card will not cost the student anything to qualify for a card. Avoid cards with annual fees when you're just getting started saving money. As long as you pay off your debt in full before the due date of each bill, a student credit card shouldn't cost you anything outside of your purchases.
However, certain transactions and late payments can add fees to your bill. Here are some common credit card fees to be aware of:
- Late fee. Ghosting on your bill can result in late fees between $25-40 depending on your credit card issuer.
- Foreign transaction fee. Some cards come with a foreign transaction fee that is typically between 2.5% and 3% when you use them overseas, say on a vacation in Europe or during your semester abroad.
- Cash advance fee. Using your credit card at an automatic banking machine (ABM, also called an ATM) or to get quick cash might seem like no big deal, but the fees to withdraw cash can come at a steep 3-5% fee. You can avoid this fee if you make cash withdrawals from your chequing account instead.
Student credit cards are a great way to get you started on building out your credit score, that will come in handy later in life, however, they can also get expensive when you use them irresponsibly. So try to spend only on what you can realistically pay off each month. That PS5 or a brand-new pair of trendy trainers, for example, might seem like a worthwhile investment now, but if you can't pay for it in full when the bill comes, it’ll cost you a lot more than what you planned to spend. Having a budget and planning for these larger purchases is a good idea to consider.
Credit card interest rates
You will see the interest rate listed as the AIR (annual interest rate). Interest rates are how much you pay on the amount of money you borrow. You'll only have to pay your card's stated interest rate if you carry a balance over to the next month.
Each month, you'll receive a paper or digital statement. It's important to check your monthly statement to ensure all of the charges are correct and that you pay your bill on time. Take note of the minimum amount due and the breakdown for how long and how much you'll pay for your current charges if you only pay the minimum payment each month. If you find that you're dreading opening up your statement each month, you might be living a little too boujee for your current season and need to scale back your spending.
A credit card when you're a student is a good idea because it's important to establish your credit history early for when the time comes for buying a car or home. Use your credit card wisely, and remember these quick tricks to staying on top of your credit card game:
- Don't get sucked into unnecessary fees, like late payments and cash advance fees.
- Check your monthly statement thoroughly for any mistakes and schedule your payment.
- Even if you can't pay your full credit card amount, try to pay more than the minimum balance each month.