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How it works

A credit card is like borrowing money now and paying it back later when you get your bill. There are two major credit card companies in Canada: Visa and Mastercard. Your credit card comes with a limit (for students it’s usually $500-$1000) and this is the maximum amount that you can spend on your card. Having a credit card helps build your credit history, which is important later on when you’re buying something large like a car or a house.

Paying your credit card on time and in full

The best way to use your credit card is to pay the full amount on time. Some people even pay their credit card right away after they make a purchase. Most credit cards have an interest rate of 19.99% annually, which can really add up over time if you just make the minimum payment. Make sure that you only spend money on your credit card that you know you can pay off.

Keep your credit utilization low

Credit utilization is how much money you’ve spent on your credit card relative to your credit limit. You want to keep this below 70% of your credit limit. For example, if you have a credit card with a $1000 limit, then you want to try to keep the balance under $700 before you pay it off.

Don’t sign up for every credit card

A lot of banks and retailers will offer you a student card using a variety of reward offers and sign-up bonuses. As a student you really only need one credit card, and having too many credit cards can hurt your credit score.

What’s the best kind of credit card for students?

Here are the things you want to look for in your first credit card:

  • No annual fee
  • Low credit limit
  • Low interest rate

You might not be able to find one with all three, but you want to make sure that you have at least two of them when getting your credit card.