Your first credit card: build credit, not debt

A first credit card is the easiest way to start a credit history in Canada. Used well, it costs nothing and quietly builds the score you’ll need later for an apartment, a phone plan or a car loan. Used badly, it’s 20%+ interest.

When can you get one?

You need to be the age of majority in your province to sign a credit card agreement yourself:

• 18 in Alberta, Manitoba, Ontario, PEI, Quebec and Saskatchewan
• 19 in British Columbia, New Brunswick, Newfoundland and Labrador, Nova Scotia and the territories

Until then you can use a debit card, a prepaid card, or a teen money app to practise. These don’t build credit, but they build the habits.

Some families add a teen as an authorized user on a parent’s card. Whether that shows up on your credit file depends on the bank, so ask them before counting on it.

Which card first?

For most people, the best first card is:

• No annual fee. You shouldn’t pay to build credit.
• Easy to get approved for. Student cards and bank newcomer programs are designed for people with no credit history.
• Rewards on what you actually buy. Groceries, food and transit cover most first budgets.

The card finder ranks cards by what they’d pay you back based on your own spending. It also tells you if you’re not old enough yet in your province.

The three habits that matter most

1. Pay the full balance, every month

Set up autopay for the full statement balance the day you get the card. Paying only the minimum keeps you “in good standing” but charges interest on the rest, usually around 20% a year.

2. Keep your balance low

How much of your limit you use is a big part of your score. Try to keep your balance under 30% of your limit when the statement closes. On a $500 limit, that’s under $150.

An easy trick is to put one small recurring bill on the card, like your phone, and nothing else for the first few months.

3. Never miss a payment

Payment history is the single biggest factor in your credit score. One payment 30+ days late can stay on your file for years. Autopay solves this.

Things to avoid

• Cash advances. Taking cash out on a credit card charges interest from day one, plus a fee.
• Closing your first card later on. The age of your oldest account helps your score, so keep a no-fee card open.
• Applying for lots of cards at once. Each application can show up on your file.

Check your credit for free

Both Canadian credit bureaus, Equifax and TransUnion, let you see your credit report for free. Check once a year that everything on it is really yours.