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The best credit card for your first job

When you head up the Everyday Banking division at Canada's top financial product comparison site, people tend to ask you your thoughts on the best products on the market; for me, it’s a common question I field everywhere I go, from dinner parties to family gatherings.

A recent visit with my brother-in-law was no exception; fresh out of school, he’s just started his first job and wanted to know – given his new purchasing power and ability to build credit – if his credit card was also due for an upgrade.

Instead of launching into my typical speech about analyzing expenses to find where you spend the most and then maximizing your rewards potential, I kept it straightforward. This is the perfect time, I told him, to ditch his student credit card given it didn’t offer a whole lot in terms of rewards, perks, and insurance.

And in terms of what plastic to pick, this is what I had in terms of sisterly advice.

 

What to look for in a credit card for your first job

First, I told my brother-in-law to be critical of the costs that can come with some rewards cards. Credit card enthusiasts like to write a lot about shiny features and glittering rewards points. These things are great, but the best rewards credit cards in Canada require a healthy income (some demand $80,000 and up) and excellent credit. 

For your first job, consider a few key features when selecting a credit card:

  • What’s the minimum income requirement? There are some excellent credit cards that require a minimum income of just $15,000 or even less.
  • What kind of credit history is required? If you haven’t been building credit for at least a year or two, such as by paying your cell phone bill or using a student credit card, you may need to build a credit history using a secured card before you can qualify for a regular credit card.
  • Is there an annual fee? When you’re early in your career, an annual fee of $120 or more can be a big expense. While the annual fee can be worth it, especially if you’re working full-time and earning more than minimum wage, it’s not always the right choice.
  • What rewards are available? While travel rewards usually have better value, cash back might be more practical.
  • Is there a balance transfer offer? If you plan to upgrade from a secured credit card, or a student credit card, look for a card that will let you transfer your balance at a favourable interest rate.
  • What is the interest rate? Especially early in your career, there will be times when you’ll have to carry a balance on your credit card. While it’s best to avoid this, you may want to choose a card with a lower interest rate if you think you’re likely to carry a balance.

My top pick: American Express Cobalt Card

The American Express Cobalt Card has been named the best overall rewards credit card in Canada by Ratehub for three years in a row, and it should be at the top of your list to consider after getting your first job.

featured

5.0 Ratehub rated

Best for Groceries & dining

First year reward
$660/yr

based on spending $2,200/mo after $156 annual fee

Earn rewards

1pt – 5pts / dollar earn rate

Welcome bonus

15,000 bonus points (a $150 value)

This card also offers Amex Membership Rewards Points, which can be redeemed for travel, merchandise, or a bill credit at a value of 1¢ per point. The American Express Cobalt Card rewards you with 5 points per dollar spent on eligible restaurants, groceries, and food delivery purchases (spend cap applies), 3 points per dollar spent on eligible streaming subscriptions, 2 points per dollar spent on ride shares, transit, and gas, and 1 point per dollar on everything else. It also has a great welcome offer where you can earn 1,250 points for each month you spend $750, up to a maximum of 15,000 points.

This card comes with perks like mobile device insurance, travel insurance coverage, and extras like American Express Front Of The Line for advance access to the biggest shows. 

This card has no minimum income requirement, but you will need to have an established credit history to be approved. You’ll also need to be comfortable with a monthly fee of $12.99 (equal to $155.88 per year).

My second pick: Tangerine Money-Back Credit Card 

The Tangerine Money Back Credit Card is a great choice for your first job with no annual fee and flexible cash back rewards. When it comes to cash back rewards, Tangerine lets you choose. You can pick two categories to earn 2% cash back, and then earn 0.50% cash back on everything else. I explained to my brother-in-law that he can tailor where he wants to earn the highest rate; keeping in mind that he and his buddies are likely to be working long hours and eating out a lot – he can use that as the extra spend category where AMEX might not be accepted.

featured

4.5 Ratehub rated

Best for Flexible spending

First year reward
$647/yr

based on spending $2,200/mo after $0 annual fee

Earn rewards

2pts – 10pts / dollar earn rate

Welcome bonus

100 bonus points (a $100 value)

When you’re approved for a Tangerine Money-Back Credit Card, you’ll earn earn an extra 10% back on up to $1,000 in everyday purchases within the first 2 months. Must apply by April 30, 2024.

You should be able to qualify for this card as long as you have some credit history established. Even if you’re only working part-time, you may still qualify for this card as its minimum income requirement is just $12,000 per year. 

 

The bottom line

Getting your first job is a cause for celebration. Make it rewarding with the right credit card. Consider qualification criteria like income and credit history, annual fees, rewards, and interest rates to find the card that will best meet your needs at this stage in your career. Starting off in the workforce is also a good time to think about personal finance in general – in addition to the right credit card, adding a high-interest savings account, a TFSA, or other investing accounts can set you up for long-term financial success.

 

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