Student Loans vs. Credit Cards

When money gets tight during school, a lot of students turn to credit cards to cover things like tuition, rent, or textbooks. It feels fast and convenient, especially when the expense is urgent. The problem is that credit cards are not built for long-term or high-cost education expenses, and this is where financial stress can start to pile up.

Student loans and credit cards both let you borrow money, but they work very differently. Understanding when each one makes sense can save you money, stress, and a lot of regret later on.

How student loans work in Canada

Canadian student loans are designed specifically for education-related costs. One of the biggest advantages is that federal Canada Student Loans are now permanently interest-free, meaning you only pay back what you borrowed, not extra interest on top of it. This change came into effect in April 2023 and applies even after you graduate.

Another important feature is how repayment works while you are in school. Most students do not have to make payments on their government student loans while they are studying full-time. This gives you breathing room to focus on school without worrying about monthly loan payments right away.

How credit cards are different

Credit cards are built for convenience, not long-term borrowing. In Canada, most credit cards come with interest rates around 19 to 22 percent, and interest starts accumulating as soon as you carry a balance past your due date.

This means that using a credit card to cover big expenses like tuition or rent can get expensive very quickly if you are not able to pay it off right away. Unlike student loans, credit cards do not come with repayment assistance, grace periods for being in school, or income-based protections.

Many students say credit card debt feels more stressful than student loans because payments are due immediately, and balances can grow faster than expected.

Why loans are usually safer for school costs

For most Canadian students, student loans are a better tool for education-related expenses. They are designed to support you while you are in school, with lower costs and more flexibility built in.

Credit cards can still be useful, but they work best for short-term spending you know you can pay off quickly, like groceries, transit, or small emergencies. Problems usually arise when credit cards are used as a replacement for student loans rather than as a convenience tool.

This does not mean credit cards are bad. It just means they serve a different purpose.

A simple way to think about it

If the expense is large, required for school, and unavoidable, student loans are usually the safer option.

If the expense is short-term and you have a clear plan to pay it off quickly, a credit card can be a sensible option.

Most students end up using a mix of both. What matters is being intentional about which tool you use and why.