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We pick two credit cards that could be the perfect match for a student with modest income and big travel ambitions.
Occupation: University student
Annual income: Not yet known (likely some freelance income)
Financial goals: Build a credit score and travel
In September, Aya Kinsey entered her first year of studies at Western University in London, Ont., where she is studying economics. She’s living away from her family in Toronto for the first time, sharing a dorm room with another student.
Before heading to school, Kinsey acquired her first credit card, an Alterna Savings Cash Back Visa. Although she also banks with EQ Bank, her primary bank card was with Alterna Savings and Credit Union. “So it was kind of natural and the easiest way for me to get a credit card,” she explains.
Still new to credit cards, Kinsey doesn’t have a credit score—a number between 300 and 900 that shows lenders how creditworthy you are (the higher the score, the better). She’s looking to build one while also earning rewards—be it cash back (“to make the most of my spending”) or travel points (she’s an Aeroplan member).
Kinsey is an avid traveller—she recently visited Greece and Japan, where she has family. “I’ve been down south to Cuba and Florida. I went to Halifax, because I have some friends out there. I’ll travel within Canada, but I’m definitely more interested in visiting places in Europe,” she says.
Like many university students, Kinsey’s ambitious, eager to travel and just wants to find her financial footing. Given her existing ties to Alterna, it’s no surprise she ended up with an Alterna Savings Cash Back Visa—most Canadians stick with the same financial institutions for a good part of their lives. But, Kinsey can find a credit card better suited to her needs by expanding her horizons.
Her Alterna card is associated with Collabria rewards, a loyalty program that works with some Canadian credit unions. She gets 1 Collabria reward point per $1 spent on groceries, gas, public transit, select recurring bills and digital streaming purchases, and 0.5 points on all other purchases. The value of a Collabria point fluctuates based on what you’re redeeming for: cash back offers the best value, at $0.01 per point, but you must redeem in increments of 3,000 points (for $30), 5,000 points ($50) and 10,000 points (for $100), depending on the Collabria card you have. And when redeeming for travel, merchandise or gift cards, a point can be worth anywhere from $0.002 and $0.008. This means cardholders earn a maximum return of 1% in rewards ($0.01) for every dollar they spend. Often, the return is less than that.
For Kinsdey, it’s clear travelling is a priority. She needs a credit card that can cheapen the costs of flying to visit family and friends. At the same time, she’s just getting familiar with paying for life on her own, tuition being her biggest expense, and her income this year will be modest at best—she hopes to freelance as a content marketer.
So, right now, Kinsey’s primary goals should be building a credit score and increasing her income potential by completing her studies. Later in life, she will likely have access to plenty of premium travel credit cards to match her desired lifestyle—for example, she’ll need a personal annual income of $60,000 for Visa Infinite cards and $80,000 for World Elite Mastercards.
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For her current situation, the CIBC Aeroplan Visa Card for Students would tick a lot of boxes. It’s a no-fee, no-income-required card. Kinsey’s already an Aeroplan points collector, and the CIBC Aeroplan Visa would add 1 Aeroplan point to her account per $1 spent on Air Canada purchases (such as future flights) and on groceries—she has a campus meal plan but expects it won’t cover all her food expenses. That’s in addition to points already earned as an Aeroplan member, through the “earn points twice” feature of Aeroplan credit cards.
Annual fee: $0
Welcome offer: earn 10,000 Aeroplan points when you make your first purchase ($200 value)
Card details
| Interest rates | 20.99% on purchases and 22.99% on cash advances (21.99% in Quebec) |
| Income required | None specified |
| Credit score | None specified |
| Point value | Aeroplan points are worth $0.02 on average. |
Kinsey would also earn 0.67 points per $1 (described by CIBC as 1 point per $1.50) spent on all her other purchases. That’s handy, considering she “might be shipping a lot of things to my dorm, like school supplies and essentials.” And 1 Aeroplan point is worth $0.02 on average when redeemed for travel, which would give Kinsey a return of 2% ($0.02) per dollar spent on flights and groceries.
Plus, the card currently has a promo offer. If Kinsey signs up before the welcome offer expiry date, she’ll bank 10,000 Aeroplan points as a welcome bonus after making her first purchase with the card. That’s enough to cover a one-way, short-haul economy ticket in North America—from Toronto to New York, for example. The one caveat: Aeroplan’s flight redemptions can be a bit complex.
In Canada, you can apply for and obtain a credit card without being a customer of the issuing financial institution. You don’t need a bank account with the card issuer to pay off your balance, either. Cardholders can typically make a payment through online or mobile banking (by adding the institution as a bill payee) or in person at a branch. You may also be able to pay by telephone, by pre-authorized debit or by mailing a cheque.
Kinsey might want to consider the Tangerine Money-Back Credit Card as an alternative to the CIBC Aeroplan Visa. She’ll need to earn a bit of cash for that, though. Tangerine asks that applicants have an income of $12,000 per year—an amount that may be achievable for her as a freelancer (or working full time in the summer). She may also have to build a fair credit score of at least 660, using her current credit card, in order to be eligible.
Annual fee: $0
Welcome offer: Earn an extra 10% cash back during the first two months (up to $100 in cash back).
Card details
| Interest rates | 20.95% on purchases, 22.95% on cash advances and 22.95% on balance transfers |
| Income required | Personal or household income of $12,000 |
| Credit score | 660 or higher |
The big advantage with this Tangerine card: She can to pick two bonus categories (among 10) to get 2% cash back. A third 2% bonus category is available by simply having your rewards automatically deposited into a Tangerine Savings Account. So, she will have to open that account on top of having the card. And as a welcome offer, new cardholders currently get 10% cash back on purchases made during the first two months (up to a maximum of $100.)
Even better, she can change her chosen categories after opening the account. (You can do this once without issue; a 90-day category holding period applies to subsequent requests for changes.) So, Kinsey could, for instance, pick groceries and entertainment as her two bonus categories for now, then switch them to restaurants and recurring bill payments later, once she has a better view of her spending habits at university.
No matter the credit card she chooses, Kinsey should be mindful to pay her balance off on time each month. Showing that she can manage credit well is crucial to building up her credit score.
Would you like credit card recommendations from our editors? Send us an email with a brief description of your credit card habits and what you’re looking for in a card.
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