Congratulations! You’ve graduated high school and now you’re taking the next big step in your life. Starting post-secondary education involves a lot of firsts – it may be the first time you’re living away from home, the first time cooking for yourself consistently, and perhaps the first time you have a job and are managing your own money.

As September creeps up and you anticipate roaming the halls of your new institution of higher learning, you’ll likely come across many company booths advertising student credit cards, likely with some kind of incentive attached. These types of promotions can be enticing, and while there are benefits to getting a credit card while you’re young (learning financial responsibility, building credit history, etc.), there are some things you should know before signing up for just any type of card.

Let’s take a look at what students in 2018 must consider before signing up for any credit card.

Prepaid vs. secured vs. unsecured credit cards

You should understand the difference between a prepaid credit card, a secured credit card and an unsecured credit card.

• Prepaid cards: These are cards where you pay the full balance upfront. That balance is the maximum amount that you can spend and the amount available lessens as it’s used. The concept is pretty similar to a debit card. However, these cards don’t allow you to build credit.
• Secured cards: These secured credit cards work almost the same way as prepaid cards, except you’ll be charged a monthly interest rate – usually between 14.8% and 19.8% – and you can use them to establish credit.
• Unsecured cards: Once you’ve proven yourself to be a responsible cardholder, you can apply for an unsecured card, which is not secured by any deposit or collateral. The company trusts that you have the means to repay your debt, based on your history.

Best cards for students building credit

You might be thinking, “Building credit? That’s so adult!” But it’s important to start off on the right foot while you’re young. This is also very crucial if you’re new to Canada. If you’re looking to build credit so you can save up for a big purchase in the future, there’s no better time than the present to do so.

Capital One® Guaranteed Secured Mastercard®

A good option is the Capital One® Guaranteed Secured Mastercard®. Since this card is guaranteed, you don’t need any credit history to apply for it. It allows you to establish your credit rating, make purchases online and by phone and access cash from any ATM around the world displaying the Mastercard logo (which can be useful during those spring break trips!). Keep in mind though that there is a $59 annual fee.

CIBC Classic Visa^TM for students

If you’re not a fan of the annual fee, another option is the 

CIBC Classic Visa^TM for students

It comes with $100,000 common carrier accident insurance, allows you to get cash advances up to $1,000 and is compatible with Visa payWave – a great feature to have if you’re making small purchases. It also gives the user the option to set it up as either a secured or unsecured card. Keep in mind that not all credit-building cards are right for students. Many of them are geared towards those who want to improve their poor credit history. Before signing up for any card, ask questions and read all the fine print to ensure the card is right for you.

Best rewards cards for student lifestyles

If a credit card has “student” in its title, chances are you can find a good match. Many financial institutions have cards designed with a student’s needs and lifestyle in mind, and they generally don’t carry an annual fee. Before signing up for the first one you see advertised on campus, think about your spending habits. How much money will you need to spend each month, while taking housing, food, clothing, toiletries, course materials and entertainment into account?

Tangerine Money-Back credit card

Tangerine's feature credit card is one of the most flexible options out there when it comes to earning cash-back. With the card, you're entitled to earn cash-back from two of 10 available categories, including restaurants, groceries, gas, entertainment, and public transportation. You can basically earn cash-back on just about everything with the Tangerine Money-Back credit card. Two selected categories will earn you 2% cash-back or “Money-Back Rewards” right away. And if you set up your cash-back to automatically deposited into a Tangerine savings account, you can also select a third category that will give you 2% cash-back. All other purchases earn you 0.50% cash-back.

Scotiabank SCENE®* Visa* card

Another option that isn’t specifically listed as a student credit card but may fit your lifestyle is the Scotiabank SCENE^®* Visa* card, which allows users to earn SCENE points on everything you buy. Those SCENE points can go towards free movies or be used at participating restaurants and retailers.

President's Choice Financial Mastercards

Or, for those students living on their own and buying more than just mac n’ cheese to eat for dinner every night, there are some great grocery rewards options.

If you shop frequently at Loblaw-owned grocery stores (Loblaw, No Frills, Shoppers Drug Mart, Fortinos, Real Canadian Superstore, etc.), you could benefit from the President’s Choice Financial^®Mastercard^®, President's Choice Financial^® World Mastercard^®, or the President’s Choice Financial^® World Elite Mastercard^®.

None of these cards have annual fees, and they are great for earning PC points on your everyday shopping. PC points can then be used for items sold in participating grocery stores where President’s Choice products are sold. The President’s Choice Financial^®Mastercard^® earns 10 PC points for every $1 spent anywhere you shop, while the World Mastercard and World Elite Mastercard earns 20 and 30 PC points respectively for every $1 spent at participating stores where President's Choice products are sold. Note that 10,000 points equates to $10 in free groceries.

So in the case of the President’s Choice Financial^®Mastercard^®, this can be attained after spending $333 on the card (likely the price of a textbook or two). Keep in mind, though, these cards all carry a 19.97% interest rate – in line with those aimed at customers with credit history.

And speaking of which, all of these cards do require you to have some credit history, but some issuers often skip the “no credit, no card” rule. It’s always best to check with the issuer before signing on the dotted line.

Tips on using your student credit card

To build credit and minimize debt, make sure you pay off your balance in full every single month. Also avoid cash advance features if you can as these waive the usual grace period for interest – meaning you are charged interest right away. The more debt you incur at a younger age, the more likely you will still be paying it off well into your 30s or even your 40s.

It may be tempting to charge everything to your new card, but avoid spending more than you can afford to pay off in full every billing cycle. It is especially important to learn this habit if you aren’t working and are still reliant on the bank of mom and dad.

And when it comes to rewards, don’t sign up for a card that doesn’t meet your needs and interests. For example, travel rewards cards – some of the most expensive cards on the market – don’t help you if you don’t plan to go on vacation. This can weigh you down with fees and ultimately defeat the purpose of building your credit.

Finally, you don’t want to go for the first credit card that’s offered to you. Just because it comes with a free backpack, doesn’t mean it’s a good card. And really, what use is a backpack if you already have one? Do your research beforehand and be smart with your money when you get that credit card, as you will build up skills that will last a lifetime.