Just because students are starting out on their credit card journey, doesn’t mean they have to settle for ho-hum, plain vanilla credit cards. Many student cards now offer a powerful cocktail of perks, benefits and rewards rivaling many premium cards in the Canadian market.
That said, not all product features are created equal. Some are smoke and mirrors, while others offer true value. Let’s separate the wheat from the chaff and hone in on which features are essential.
Essential Credit Card Features for Students
No Annual Fees
There’s no justification for charging annual fees on student credit cards. There’s even less justification to pay them. With so many student credit cards in Canada without annual fees, offering the same or better rewards and benefits, why in the world would you get a card that has one?
Annual fees make sense when you spend a lot on your credit card and have the chance to make up for it in rewards and the insurances offered on the card. With student credit cards typically starting off with credit limits as low as $500, how in the world can a student spend enough to make up for the annual fee? You can’t. So don’t bother.
If you’re going to spend money, you might as well get rewarded for it. Cash and debit won’t give you nearly as many rewards, if at all, as credit cards. Play it safe, and pay down your credit card balance every month, and your credit card will “pay” you to use it.
Not all student rewards credit cards are created equal. While more and more cards are offering a 1% rewards rate, others offer much more. For example, the no-fee BMO SPC Cashback MasterCard offers 1% cashback but ALSO automatically enrolls you in the SPC student discount program for free, every year. Use your BMO SPC Cashback MasterCard and get 10% to 15% discounts at hundreds of your favourite stores like American Eagle, Banana Republic, Urban Outfitters, Pizza Pizza, Aldo, etc… No other credit cards in Canada offer that type of value.
The best student credit cards come with a healthy sign-up bonus. Instead of charging you an annual fee, these cards essentially pay you to give them a try. MBNA Student cards offer a $10 welcome bonus, and $10 each year you keep the card open. BMO offers $60 when you activate your BMO SPC cashback card and 500 Air Miles when you activate your BMO SPC Air Miles card.
If you’re going to get a new student card you might as well get paid to do it. Who can’t use $60 just for getting a new no-fee credit card?
This should be a no-brainer, but some Canadian banks just don’t get it. The best student credit cards understand that you’re a full time student, and your studies are a priority. However, some student cards require that you earn part-time income and demonstrate proof of your income with pay slips! Don’t bother with the application.
There are plenty of Canadian student cards that don’t require any income whatsoever. If you’re a student with a pulse and no previous delinquencies, you should get approved. They’ll start students off with a small credit line of $500, and then as you demonstrate responsible payment, they’ll bump your credit line up within 6 to 12 months.
Free Purchase Protection & Extended Warranty
One of the big advantages of using a credit card over debit or cash is that many of your purchases get automatically protected. That said, not all cards offer the same protection.
One really cool free benefit is called purchase protection. Essentially, if you buy something with your credit card and it gets damaged or stolen within 90 days of purchase, it will be repaired or replaced. So imagine you buy a new pair of sunglasses and someone steps on them by accident – you’re covered!
Another cool free benefit is extended manufacturer’s warranty. Use your card to buy an item and your credit card will double the manufacturers warranty for up to one year. Essentially, if the manufacturer offered a 3 year warranty, your card will extend the same warranty for a fourth year.
As a student you probably make a lot of online purchases. There’s a good chance that at some point your payment information may get hacked.
If you use a credit card to make your purchases both MasterCard and Visa offer ZERO liability guarantees on any fraudulent charges. You pay nothing for on any charge that is not authorized by you. Simply call up the credit card company, let them know of the unauthorized charge (it could even be a membership fee which auto-renewed without your permission) and the credit card company will investigate and be liable to pay the fee.
Unlike a debit card which also offers zero liability, you never pay for an unauthorized charge with a credit card. With a debit card the money leaves your checking account right away, then the bank needs to initiate and complete its fraud investigation before it pays you back. With a credit card your bank will remove the fraudulent charge from your statement, so you never pay for the product in the first place.