Natasha Macmillan, Business Unit Director - Everyday Banking
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.
Best for Groceries & dining
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)
- Ratehub.ca’s 2023 Award Winner – Best Rewards Credit Card
- In your first year as a new Cobalt Cardmember, you can earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 in net purchases on your Card. This could add up to 15,000 points in a year. That’s up to $150 towards a weekend getaway or concert tickets
- Earn 5x the points on eligible eats and drinks in Canada, including groceries and food delivery. Spend cap applies.
- Earn 3X the points on eligible streaming subscriptions in Canada
- Earn 2X the points on eligible ride shares, transit & gas in Canada
- Earn 1 additional point on eligible hotel and car rental bookings via American Express Travel Online
- Earn 1X point for every $1 in Card purchases everywhere else
- Enjoy access to hotel bookings, and up to $100 USD hotel credit to use on amenities when charged to the room for a stay of 2 or more consecutive nights through The Hotel Collection from American Express Travel
- Transfer points 1:1 to several frequent flyer and other loyalty programs
- Cobalt Cardmembers receive regular Perks such as bonus reward offers and access to great events
- Access Front Of The Line® Presale & Reserved Tickets to some of your favourite concerts and theatre performances and special offers and events curated for Cardmembers with American Express® Experiences
- American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment
The American Express Cobalt is one of Canada’s best travel credit cards. If you’re looking for a versatile credit card that rewards both everyday spending and travel, the American Express Cobalt is an ideal choice. Cardholders can enjoy strong travel insurance, a generous welcome offer, and flexible point redemption options.
- Exceptional point earning: 5x the points on eligible restaurant and food delivery, 3x the points on eligible streaming services, 2x the points on travel and daily transit. The earning potential for restaurants and takeout is significantly higher than most other cards
- Flexible point redemption:Travelers can choose from three ways to use their points: points 1:1 to several valuable loyalty programs including Aeroplan, use the Fixed Points Program to simplify redemptions regardless of travel dates, or use points for statement credits at a rate of 1 point = 1 cent. Or, redeem Membership Rewards for travel, gift cards, merchandise, or purchases
- Exclusive access: Enjoy privileges such as Front of the Line Presale and Reserved tickets to concerts, theatre performances, movie screenings, culinary events, and other special offers
- Comprehensive travel insurance: Benefit from a strong travel insurance package, including up to $5,000,000 in travel emergency medical
- No additional fee for authorized users: Add authorized users for no extra cost (an average fee of $30 – 50 on other comparable cards)
- Monthly fee: A monthly fee of $12.99 (totalling an annual fee of $156, which is higher than most other rewards cards)
- Limited acceptance: American Express isn’t as widely accepted in Canada compared to Visa and Mastercard
- Travel insurance age limitations: The travel insurance package does not cover trip cancellation or medical coverage for cardholders over the age of 65
- Lack of airport lounge access: Frequent travellers may be disappointed as this card does not offer access to airport lounges
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.
Best for Flexible spending
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)
- Ratehub.ca’s 2023 Award Winner – Best No Fee Cash Back Credit Card
- Life’s back in session. Enjoy it with an extra 10% back.*
- Apply for a Tangerine Money-Back Credit Card by April 30, 2024 and earn an extra 10% back (up to $100) when you spend up to $1,000 in everyday purchases within your first 2 months.*
- Earn 2% Money-Back Rewards on purchases in two 2% Money-Back Categories of your choice, and 0.50% Money-Back Rewards on all other purchases.
- Earn extra rewards – have your Money-Back Rewards deposited into a Tangerine Savings Account, and get a 3rd 2% Money-Back Category.
- No limit on the amount of Money-Back Rewards you can earn.
- Change your 2% Money-Back Categories to suit your spending.
While the fact that the Tangerine Money-Back Credit Card is a no annual fee card, what really sets this card apart is the customizability. With this card, you can choose your own bonus categories (which will earn you a strong cash back rate of 2% per dollar spent). This is rare in the credit card market and means you can avoid being locked into a bonus category that you can’t take full advantage of or that doesn’t align with your spending habits.
- Customizable bonus categories: Flexibility to pick up to three bonus categories to earn 2% cash back on (out of a total of 10 options), which is in sharp contrast to most other cards where you have fixed bonus categories that you have no control over. Users are also given the freedom to change the bonus categories at any time (changes will take up to 90 days to come into effect)
- High cash back earning rate: 2% cash back per dollar on bonus categories is one of the richest earn rates for a no-fee card
- Wide acceptance: Widely accepted almost everywhere including No Frills and Costco
- Additional cards at no cost: Free supplementary cards for authorized users
- Frequent cash back reimbursement: Cash back is refunded on a monthly basis, instead of the standard annual reimbursement
- Limited cash back for non-bonus categories: For all purchases that aren’t categorized under one of your chosen bonus categories, you’ll earn just 0.5% cash back
- Limited travel insurance and perks: No travel medical insurance or any substantial side perks
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.