I remember it like it was yesterday.
Soon after getting accepted to university, I went to visit the bank and the bank teller asked me if I wanted a credit card.
Without even thinking, I said “yes.”
I had no income and was about to take on quite a big student loan debt. Perfect time to get a credit card, right?
I would like to say that at 18, I was mature and very responsible with said credit card, but sadly… I was not.
I used it to buy things I didn’t need and couldn’t afford.
Looking back, I really wish there would have been someone in my life to help me navigate the credit card world.
…Or that there was a blog that would have told me the importance of:
- understanding how credit cards work,
- doing research before choosing a credit card,
- paying my bill in full every month,
- staying on top of my credit score, and….
- knowing how much willpower I have.
My cautionary tale
I was living away from my parents for the first time and had a piece of plastic that allowed me to get the things I wanted.
I used my credit card to buy:
- cd’s (because I’m THAT old and was morally against Napster),
- movies (because Netflix wasn’t a thing and I needed something to help me procrastinate),
- things to decorate my dorm room, and…
- a fish that I called “Hal” (which was short for Jalapeno, obviously). Plus…
- I went out to eat and drink with my friends far more than my college student wallet should have allowed.
Related: Why Every Student Needs An SPC Card
I saw my credit card as free money and didn’t give a single thought to the fact that nothing in life is free and eventually I would need to pay all that money back.
Needless to say, my frivolous spending caught up with me and I was left with $1,000 in credit card debt.
So, I did what any Liberal Arts student would do… I went out, got myself a job at Subway as a “sandwich artist,” and started working the night shift to pay back that $1,000 + interest.
In a nutshell, I was not as informed about credit cards as I should have been and I’m sure my story isn’t the only one like this.
As the saying goes, we learn from our mistakes, and I’m here to pass on the things I have learned to any students out there who are looking to get a credit card for the first time.
1. Know how credit cards work
There are many people who think credit cards are bad, but that isn’t always true.
Credit cards can be abused and get irresponsible users in a lot of trouble, but there are usually two sides to every coin.
There are a lot of good and valuable things that credit cards can offer cardholders, such as:
- valuable rewards,
- premium perks, and
- complimentary insurance. Plus…
- they can save cardholders time and money.
So be sure to do your research.
2. Know which credit card would suit you best
I did zero research before getting a credit card.
I took the first credit card I was offered and I hung onto it for about 15 years.
Who knows where I could have traveled had I been accumulating rewards that whole time!
The best credit card in Canada right now is the BMO SPC CashBack Mastercard:
Related: Best Student Credit Cards in Canada
3. Know your monthly budget
I cannot stress this point enough…
Just because you have a new shiny credit card, that doesn’t mean your budget should fly out the window.
You need to continue to spend within your means and only buy things you can actually afford.
Set a budget based on your income and stick to it – no matter how tempting that new plastic might be.
4. Know your credit score and stay on top of it
I’m one of those people who hates going to the doctor.
I always think I would rather not know if something is wrong with me.
And for several years, I felt the same about my credit score.
I never wanted to know what it was, because, I assumed that if it was bad, I wouldn’t want to know.
However, knowing those 3 little digits has really helped me be more responsible and plan for my future.
If your credit score is less than ideal, now is the time to start taking steps towards getting your score back on track.
And don’t worry – there are ways you can check your credit score for free.
5. Know yourself
Finally, I think one of the most important tips is to know yourself.
Getting a credit card as a student is a great way to help build your credit history.
However, if you don’t trust yourself with a credit card, many people will tell you not to get one. But I think you should get one anyway.
Here is what I suggest:
- Step 1: Get a credit card and put a monthly subscription on it (your Netflix or your Spotify).
- Step 2: Set up your bank account so that it will automatically pay off your credit card every month.
- Step 3: Put your credit card somewhere you will not use it, or even give it to a parent to hold onto. This will allow you to build your credit while removing the temptation to overspend.
Just because you have a credit card, that doesn’t mean you need to use it a lot or even carry it around in your wallet.
Just keep in mind that in order to help build your credit score, you will need to put an occasional purchase on your credit card to show lenders that you are able to pay bills on time.
What about you?
Do you have any cautionary tales to share with young readers?
Or do you have any other tips for a student choosing their first credit card?
We would love to hear from you in the comments below.