What frightens you the most when you think about your future? Is it the fact that you may have to live away from your home? Are you ready to start preparing your own meals? As a student, there is something else you might have to start getting used to – managing your expenses.
You will definitely have to apply for a credit card and start building your credit. However, it may not exactly be easy to choose between any of the numerous brands currently available. Each credit card company will have sweet advertisements to try and tip your decision in their favor. You have to know how to look beyond the advertised aspects to choose a great credit card. But first, why is it important for you to have one.
The Benefits of a Student Credit Card
Your first credit card presents you a set of advantages all impacting your financial life. They include:
- An opportunity to build up your credit. This is the biggest advantage you can get from a credit card as a student. As you make monthly payments, your credit score rises allowing you to qualify for big loans in future. This is a big deal because someday you will need a mortgage or car loan.
- Shopping convenience. With a credit card, you do not have to carry cash around to pay for library services or hotel bookings. You can also easily pay for online purchases.
- Rewards. Most credit cards have certain rewards you can redeem.
- Increased financial consciousness. With a credit card, you can start to monitor your spending habits and the amount you pay monthly. This allows you to build up a responsible financial behavior which will be very useful as you mature.
Before you can have your pick of the best student credit cards Canada, you have to distinguish between the common forms available. Prepaid, secured, and unsecured student cards differ and you have to know their distinguishing aspects. Their unique characteristics are:
- Prepaid. With these cards, you pay the full balance upfront. You can only spend up to the amount you have paid and it lessens as you spend. They operate in a similar manner to debit cards. However, you cannot rack up credit with these cards.
- Secured. They operate in a similar manner to prepaid cards, only that they attract monthly interest rates. The rates normally between 14.8% to 19.8% and you can rack up credit with these cards.
- Unsecured. Once you have proven yourself as a responsible borrower, you can apply for and get unsecured credit cards. With these cards, you do not have to produce any collateral or pay a deposit upfront. The credit card company believes that you have a credible financial history to repay your debt on time.
What Do the Best Student Credit Cards Canada Have in Common?
Many companies offer credit cards designed to suit the student lifestyle. Even though credit cards differ by brand, certain characteristics distinguish the best. The following are some of the qualities of the best student credit cards Canada:
- Zero annual fees. As a student, you may not have an income source yet and a credit card with an annual fee might be too expensive.
- Suitable rewards. The rewards should fit within your lifestyle. Movie tickets, shopping items, and online rewards are some of the things that might make sense.
- Easy approval. It should be easy for you to be approved for the credit card even without a credit history. This may sound like a standard but some financial institutions may require you to have an income source or guarantor.
More students are now taking up student credit cards. However, you should note that this also comes with a level of responsibility. While a credit card offers all the above advantages, it could be a source of financial stress if you fail to use it well. You could be faced with hefty fines and high-interest rates due to late or missed payments. Also, be responsible for how you spend to avoid racking up a huge and unaffordable debt.
No matter how many times you do it, choosing a student credit card will always pose a challenge. Each of the numerous companies has its unique qualities and rates that you have to know and evaluate rationally. At Bonsai Finance, we help you make the right choice by connecting you to the best student credit cards Canada. We also offer you valuable information to help you build your financial future. Connect with us today to learn more.