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The Best Credit Cards for Young Adults & New Grads

From building credit to earning rewards, we break down the best one for you and your finances

Education was challenging, time-consuming and expensive. The good news? It has excellent returns for lifelong earning potential.

 

Recent grads entering the job market have new financial priorities — paying down debt and building up a solid credit history among them. Similar to your investment in post-secondary education, a good credit score has long-lasting returns, affecting everything from car financing to mortgages.

 

Here we’ll compare the best credit cards for young adults during this life phase. No-fee and balance transfer cards are good options right now — and perhaps rewards are not a priority, as we’ll discuss below.

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What is the best credit card for young adults?

 

Assuming you’re starting an entry-level position in your career and are likely carrying student debt, no-fee credit cards are a priority right now. Keep costs as low as possible as you focus on regular purchases such as groceries and bill payments, and your bigger goals of debt repayment and credit history.

 

Credit cards with fees are bringing premium rewards — points or travel perks, for instance — that are better suited in a later life phase, in which you’re spending and travelling more.

Compare Canada's best no fee credit cards

The best low interest cards for
  • any annual fee
  • no annual fee
CardAnnual feePurchase interest rateBalance transfer rate
Featured
MBNA True Line® Mastercard® credit card
Purchase interest: 12.99%, Cash advance: 24.99%, Balance transfer: 12.99%

$0

12.99%

12.99%

Featured
Scotia Momentum® No-Fee VISA Card
Purchase interest: 19.99%, Cash advance: 22.99%, Balance transfer: 22.99%

$0

19.99%

22.99%

Featured
TD Rewards Visa* Card
Purchase interest: 19.99%, Cash advance: 22.99%, Balance transfer: 22.99%

$0

19.99%

22.99%

Featured
Harley-Davidson Mastercard®
Purchase interest: 19.99%, Cash advance: 22.99%, Balance transfer: 22.99%

$0

19.99%

22.99%

Some of the best no-fee cards include the Triangle Mastercard, with excellent rewards from Canadian Tire purchases (4%), and decent points for groceries (1.5%) and other spending (0.5%); the SimplyCash Card from American Express, with rewards at 1.25% for all purchases; and the PC Financial World Elite Mastercard, with a points system for spending in Shoppers Drug Mart and participating Loblaw stores, as well as some gas (e.g. Esso and Mobil) and travel spending.

Balance transfer cards — allowing you to transfer debt between cards, from a higher-interest card to a lower one, for instance — are well covered by BMO with three options: BMO Air Miles MasterCard, BMO Rewards MasterCard and BMO CashBack MasterCard. These also have no annual fee.

 

The Home Trust Secured Visa is one way to build credit with a secured credit card — more on those later — and has a no-fee option.

 

Best credit card to build credit in Canada

 

As important as it is, building good credit isn’t hard. 

 

Every time you buy something or pay a bill, you can improve your score. Use your credit card for purchases and pay down your balance regularly and on time — and keep up with monthly bills and payments on other debt. Over time, with a higher rating, you’ll have access to better cards, perks and interest rates.

 

Secured credit cards are an excellent entry-level option for recent grads without a good score or any score at all. These cards require a security deposit, but then can be used like any other credit card for online shopping, reservations, bill payments, and so on. 

 

Since they require a deposit and are considered safer for the lender, it’s easier to be approved. Unsecured cards do not require a deposit but have more stringent requirements for approval — such as a better score, for instance.

 

Consider a secured credit card as a stepping stone: easier approval, and unlike a prepaid Visa, it can help you build up your rating. Once you have some solid credit history behind you, you can move up to an unsecured card with no deposit, and better perks and rewards.

 

As mentioned above, the Home Trust Secured Visa is a good option for a no-fee secured credit card.

 

Best no-fee rewards credit cards for young adults

 

One of the best reasons to have a credit card — aside from convenience and score-building — is collecting rewards for your spending. And you don’t need an annual fee for decent rewards; keep your costs down with one of the many no-fee cards available.

 

Rewards cards are as unique as the cardholder. You can prioritize cash back, travel perks or store loyalty programs, based on your everyday spending and lifestyle. 

 

As you compare cards, look at both sides — where rewards can be earned, where they can be spent. There may be added benefits, such as hotel perks or extended warranties on purchases.

 

As mentioned earlier, some of the best no-fee cards include the Triangle Mastercard, the SimplyCash Card from American Express, and the PC Financial World Elite Mastercard. 

 

For cash back specifically, BMO CashBack MasterCard and MBNA Smart Cash Platinum Plus Mastercard join the list. 

 

For travel rewards, BMO Air Miles MasterCard, Best Western Rewards MasterCard and Home Trust Preferred Visa are well-rated options.

 

As you build up a strong credit score and move up in your career, you can upgrade to a fee card with enhanced rewards — and possibly bring the points with you. Look into transferring points when changing cards.

Best balance transfer credit cards to help with debt

 

If you’ve collected significant debt on other cards, a balance transfer card can be an excellent tool. 

 

During a promotional period, you can transfer your debt to a new card with an ultra-low interest rate — and if you pay it off aggressively, potentially save hundreds in interest.



Pros

  • Low, promotional interest rate (usually for a limited period of time)
  • More of your payments goes to the principal debt, less goes to interest
  • Cardholders can potentially save hundreds and get out of debt sooner

 

Cons

  • Balance transfer fee, usually between 1% and 5%
  • When promotional rate ends, if you haven’t cleared the debt, the standard rate may cost more in the long run
  • Any card payments will go to the original transferred balance first, so new purchases will continue to collect interest (at a standard rate) until the initial debt is paid in full

 

The bottom line

 

Many young adults are starting their careers, building a credit history and paying down debts. 

 

At this stage, credit card priorities should be focused on zero fees and, if applicable, balance-transfer options to clear debt quickly. With a strong credit rating down the line, and less debt, young adults can graduate to paid cards with accelerated rewards.

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