To answer what a student credit card is, it may be best to elaborate a bit on why a student would need a credit card at all. Let’s take a look at the following trivial example – a college graduate has just started looking for a job and an employer calls him for an interview. It then occurs to the young gentlemen that he could not appear before the manager of a big company in a pair of pallid blue jeans and a slouchy T-shirt, hence he needs a suit. Here is where a credit card comes in just handy. He buys the suit now, takes the interview and repays the amount due later in time.
This example illustrates one of the advantages of this financial instrument, and the buy-now-pay-later deal is not the only good thing about student credit cards. On one hand, it could easily lead to a startling amount of debt weighing on your young shoulders. On the other, the real advantage of having a credit card in college is that it helps you build a good credit score at an early age. You may be already well aware that credit score is important for your future dealings with banks and credit card companies. Moreover, credit card companies tend to be very lenient to young borrowers, giving them long grace periods and reasonable interest rates on their credit cards. Below is a brief review of the most popular student credit cards available in Canada.
The first group of credit cards for students has a zero per cent annual fee. These are MBNA’s Studentrewards MasterCard with an 18.99 percent annual interest rate on purchases, and 19.99 percent on cash advances and balance transfers; the SPC Mosaic MasterCard issued by the Bank of Montreal comes with an interest rate of 19.50 percent on purchases, cash advances and balance transfers, plus discounts at the SPC card retail points around the world and extra Air Miles or Cash Back rewards. The CIBC’s VISA Classic credit card for students has an interest rate of 19.50 percent on purchases and 21.50 percent on cash advances, while balance transfers are not available. The financial product of CIBC, however, offers comfortable purchase protection solutions to its holder.
Laurentian Bank’s Student VISA Black Card goes with an annual fee of $20 ($1.66 per month) which may be reimbursed if you spend over $200 during your billing cycle. Unfortunately, this credit card does not allow cash advances or balance transfers. The average interest rate on purchases is at 19.99 percent.
The Royal Bank of Canada offers VISA Classic II for students, going with an annual fee of $15 and 19.50 percent interest rate on purchases and cash advances. Balance transfers are not available, and its holder earns reward points with every purchase. Another card you can apply for is the RBC Rewards Visa Gold which comes with a 19.99 percent interest rate and no annual fee. The young clients of the bank earn 1 reward point for every $2 spent on purchases. Customers can redeem their points for gift cards and certificates, merchandise, travel, and more. Alternatively, college students may apply for Cash Back Card and earn 5 percent cash back on purchases at grocery stores. The card goes with an annual fee of $19 and interest rate of 19.99 percent.