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Key takeaways:
Starting university life often means managing your own money for the first time — as well as navigating the world of credit.
A credit card could be a very effective tool for building your credit history. But getting one can cause anxiety and confusion, especially when it comes to deciphering all that fine print.1
Here's how to look past the noise and choose a credit card that fits your student lifestyle and tees up your financial future.
A student credit card is a credit product designed especially for post-secondary students with no credit history.
These cards tend to have eligibility requirements that may be more accessible for students and no annual fee, making them both affordable and simple to use. In other words, they may be a decent first credit card for students who meet eligibility requirements.
Your goal with a student credit card is to learn how to use credit responsibly. This way, you begin building a positive credit history and score, which will help you meet future financial goals — like upgrading to a premium card later.
Figuring out which student credit card is the best for you and your spending habits requires research. Applying for a bunch of random credit cards is a bad idea because multiple applications can damage the credit score you're trying to build.
Weigh these factors:
Annual fee
An annual fee is a flat amount you pay the credit card company for using the card.
Many student credit cards in Canada either have no annual fee or a low annual fee, which is helpful when you’re starting to build good money habits.
Interest rate
Credit cards charge interest when you don't pay your balance in full each billing cycle. In other words, if you spend $100 and only make a payment of $75, you’ll have interest charges on the remaining $25.
Many credit cards have purchase interest rates around 20% or higher.5 If you carry a balance, interest charges can add up quickly — so it’s important to pay your balance in full whenever you can.
Please note that for cash advances, there is no interest-free grace period - you pay interest from the date of your cash advance.
To save on interest charges, you can apply for a low-interest rate card. But the best way to avoid interest charges is to pay off your credit card in full every month.
Rewards or cash back
Not all student credit cards offer perks, but if you do your research, you might find:
Cash back credit cards: Popular because they return a portion of the money you spend to you.
Rewards credit cards: Let you earn points that you can redeem for products or services. Some rewards credit cards may offer additional perks or benefits, which can sometimes come with a higher annual fee. Consider whether those added benefits provide value based on your spending habits and financial needs.
Scotiabank partners with Scene+TM and offers several student credit cards that let you earn Scene+ points — the Scotiabank® Scene+™ Visa* Card (for students) and the Scotiabank American Express® Card (for students) — and redeem them for travel, shopping, dining, and more. Check the individual card pages for current annual fees, interest rates and eligibility requirements.
For students, a rewards card may offer more value than one offering cash back, depending on spending habits and how rewards are redeemed. But consult your budget to see which card best complements your spending.
Welcome bonuses
Some cards offer welcome bonuses or promotions when you apply or for completing certain conditions like minimum purchases in a promotional period. Look for accelerated earn rates, bonuses or rewards, or other benefits like low balance transfer rates.
Once you receive your student credit card, it’s important to use it responsibly. Not only does your credit score depend on it, but carrying credit card debt can become a problem, fast. Build good habits now by:
Pay your bills. Paying your bill on time every month
Make minimum payments. Making at least the minimum payment by the due date (you can set up automatic payments to help with this)
Space out new applications. Making sure you space out applications for new cards, as every application temporarily has a negative effect on your credit score
Check your score. Regularly checking your credit score to track your progress
Spend what you can afford. Not spending more than you can afford to pay off each month
Think of your credit score — that three-digit number reflecting the data in your credit history — as a report card for how you handle your debts. The higher the number, the better your score.
Credit scores in Canada range from 300 (poor) to 900 (excellent), and a score of 660 is typically considered good.2 Anything less, and you might need to work to improve your credit score.
But if you don’t have a credit history, there’s no way to build a credit score. That’s where student credit cards come in. As long as you use them responsibly and pay off your debt, you can build a stronger credit score over time.
Like your credit history, your credit score helps lenders determine whether you're likely to pay back your loans. Some landlords or organizations may also request a credit check as part of an application or screening process.
Higher credit scores can also help you get approved for better credit products. For example, many premium credit cards require a higher credit score. It can also help you negotiate better interest rates or more favourable terms on loans.
So, building a strong credit score is one way to set yourself up for future success.
Your credit history is a record of how you've dealt with debt in the past. It tells banks, credit card companies and other lenders if you’re a trustworthy borrower.
When you take out a loan (like a private student line of credit) or use credit, your activity is logged with a credit bureau — in Canada, that's either Equifax or TransUnion. This includes payments you make, their amount and whether they were made on time. If you declare bankruptcy or have another big financial judgment against you, that lands in your credit history, too.
Not using your credit card responsibly can ding your credit history — and your credit score.
Issuers set eligibility requirements for their credit cards, such as a minimum annual income or credit score. In addition to meeting those, you must:
Be at least the age of majority in the province or territory where you reside3
Have identification
Show proof of enrolment, including your full name, school name, date, and duration of the program you're enrolled in
Show proof of annual income
If you apply for a student credit and your application is denied, it’s worth taking the time to investigate why. Common reasons include:
Low credit score
Not meeting the minimum annual income requirement
Incomplete proof of enrolment
If you need to build up your credit score to be eligible, consider using a secured card for a while. If the issue is your income, speak with a Scotiabank advisor about card options that may be a better fit before submitting a new applicati
Once you identify and repair the issue, wait a month or two before you apply again. Since a new credit card application is a hard credit check inquiry, you risk harming the credit score you're trying to grow.
Bottom line
Student credit cards are a great way to learn how to use credit, and some options may be available to students with limited or no credit history, subject to the card’s eligibility requirements. They do help you build both, which you'll eventually need for your adult life, such as to qualify for car loans, mortgages and even certain cell phone plans.
Remember, before you apply, do your homework — the best student credit card is the one that matches your spending and priorities.
