Nearly nine in 10 college and university students have a credit card and 65% use it regularly making 12 purchases a month on average. What’s more, 80% of them pay off their balance—in full—every month, according to an annual survey for BMO. Pretty impressive, especially when you consider the wider population was carrying on average $3,556 in credit card debt in the second quarter, TransUnion Canada data shows.

It’s not surprising then that the majority of students polled don’t expect to have any credit card debt when they graduate. Talk about getting started on the right foot.

Pollara, a public opinion and research company, conducted the survey of more than 1,000 students on behalf of the bank and found only 6% use their cards to pay for school expenses, using their plastic instead to pay for discretionary items. Convenience, not lack of funds, it would seem are behind most of their credit card purchases. BMO did not ask students whether they’re paying off their credit card bills using money from student lines of credit though its not a behaviour the bank typically sees in its portfolio. Student lines of credit usually come with lower borrowing costs than credit cards.

“Students are doing their homework when they use credit cards. They clearly understand the wisdom behind treating them as payment vehicles—not borrowing instruments,” said BMO vice-president Su McVey in a press release.

The study also found that more young adults are using student discount programs and loyalty reward programs. Fifty-six per cent of students are using discount and rewards programs this year, up from 47% in 2011, the results show.

MoneySense recommends students who struggle to pay off their balances in full each month opt for a low-rate credit card charging between 4% and 9% interest, as oppose to the typical 19%, if they absolutely need a credit card. Students who pay off their bills regularly are ahead of their class and should consider a student card. We’ve ranked the best student credit cards with no annual fee and great perks such cash-back and discounts on clothing, movies and travel.

The Pollara online survey was completed between July 19 and July 26, 2012, with a sample of 1,018 post-secondary students. A probability sample of this size would yield results accurate to ± 3.1%, 19 times out of 20.

To find the card that best matches your spending and re-payment patterns, try our Credit Card Selector Tool.

In the meantime, here’s our list of best low-cost cards that provide the highest average percentages of cash back for every dollar you spend:

1.

RBC
Cash Back MasterCard
Annual Fee: $0
Current Interest Rate: 19.99%
Card Details: Includes purchase security and extended warranty.

2.

Scotiabank
L’earn Visa
Annual Fee: $0
Current Interest Rate: 19.99%
Card Details: Includes car rental discounts.

3.

TD
Rebate Rewards Visa
Annual Fee: $0
Current Interest Rate: 19.99%
Card Details: Includes car rental discounts.

4.

Scotiabank
Scene Visa
Annual Fee: $0
Current Interest Rate: 19.99%
Card Details: Includes discounts on car rentals and movie snacks.

5.

TD
Classic Travel Visa
Annual Fee: $19
Current Interest Rate: 19.99%
Card Details: Includes car rental discounts.

6.

BMO
SPC Air Miles MasterCard
Annual Fee: $0
Current Interest Rate: 19.5%
Card Details: Includes discounts at various retailers, extended warranty, purchase protection.

7.

RBC
Signature Rewards Visa
Annual Fee: $39
Current Interest Rate: 19.99%
Card Details: Includes travel and car rental collision insurance, purchase security and extended warranty.

8.

RBC
Rewards VISA Gold
Annual Fee: $0
Current Interest Rate: 19.99%
Card Details: Includes travel and car rental collision insurance, purchase security and extended warranty.

What will you pay for your student credit card?

Here we show the net cost of the cards, assuming your unpaid balance is equal to your monthly spending.

Learn how we crunched the numbers for Canada’s Best Credit Cards 2012 by reading our methodology.

Have trouble paying off your balance month after month? Try one of these low-rate cards. Students who manage to pay off their balance every month are ahead of their class and ready for bigger rewards. Check out our Best cash-back cards 2012, Best travel cards 2012 and Best merchandise cards 2012 lists.

Full-time post secondary students are often covered under their parent’s home insurance plan, according to John McClelland of Toronto-based McClelland Insurance brokerage. The key is double-checking with your provider and notifying them of the new address.

A simple phone call can protect students from all kinds of mishaps in and around campus.

“There’s the obvious— fire, water damage and theft—concerns but there are also liability concerns,” McClelland said.

If someone is injured on the premises or a toilet floods over and causes water damage to a few floors below, it can hugely expensive and time consuming without insurance.

Not every rental unit problem is the landlord’s responsibility either.

“There can be a lot of misconceptions out there,” McClelland said. “It depends who was found to be negligent. Tenants can be held responsible.” Without proper insurance, tenants who are found to be at-fault are on the hook for damages.

“Everyone who is on their own should have a tenant’s package and a lot of people don’t realize the importance of this,” McClelland said. A recent poll commissioned by TD Insurance found 47% of Canadian tenants under 35 do not have renter’s insurance and 32% incorrectly believe they are covered under their landlord’s insurance policy.

Tenant insurance is especially important for students because student housing can be more risky than single-family homes thanks to high turnover rates—not to mention the parties.

Protecting possessions from theft is reason enough to seek out coverage. Students may not have accumulated many material possessions but the stuff they do have is usually pretty valuable like laptops, TVs, textbooks and musical instruments.

Students who are covered under a parent’s plan should read the policy carefully to ensure there are no gaps in coverage.

“All companies have different wording on their habitational policies,” McClelland said.

For example, some companies only cover students staying in residence as opposed to just off-campus.

Others will limit student coverage to $10,000 in valuable regardless of the contents limit their parents enjoy.

“For a lot of students who are moving into residences that’s probably sufficient,” McClelland said. But tenants buying their own furniture to live in non-student housing might want to consider additional coverage.

Luckily, the average renter’s insurance plan is pretty reasonable, costing roughly $500 a year. Plus, tenant insurance can be bundled with car insurance for additional savings.

Tenant insurance can also help 20-somethings establish an insurance history that should help lower their insurance costs in the long run. A clean record can earn you free claims, loyalty discounts and lower deductibles on all types of insurance in the future.

There’s more for young scholars and their parents to consider when it comes to insurance. Living with a roommate that has insurance doesn’t mean you’re covered as well.

Students covered under their parent’s policy are typically subject to their parents’ deductible if and when a claim is made.

“In a lot of cases that’s going to be higher than a student might be comfortable with,” McClelland said.

And parents should keep in mind that any claims made by their child will affect their own claims history and could result in higher premiums.

“We’ve had some parents say, we know that they can be covered under our plan but we think it would be a good stepping stone toward responsibility but also protect our insurance if they had their own policy,” McClelland said.

It’s really about what you’re comfortable with and practicing preventative maintenance such as locking windows and doors while you’re out and even turning off the water if you’re away over the holidays to ensure the pipes don’t burst.

“Moving out of your parents’ home for the first time can be very liberating, but it also comes with a lot of financial responsibilities,” said Dave Minor, Vice President, TD Insurance.

“For those trying to make ends meet, tenants may be tempted to forgo renter’s insurance to try to cut costs. But consider the cost of replacing your laptop or smartphone if you were robbed. Before moving out, it’s important to understand the basics of renter’s insurance and ensure you have the right coverage in place to protect yourself.”

Mike Henry, Scotiabank senior vice president and head of retail payments, deposits and lending, says creating a budget is key.

“Try and get a feel for how much money is going to come in over the summer and through the year—from gifts, from bursaries, from scholarships—and everything that’s going to go out.”

Try printing out this student budget worksheet by the Financial Consumer Agency of Canada.

Beyond having a plan and sticking to it, “there are other things you can do to stretch a buck for sure,” Henry said.

Pick your plastic. All you need is one good, low-fee credit card. If that card offers cash-back on a portion of your spending or rewards for things you actually use, that’s a bonus. Pick the best card for you with MoneySense’s credit card selector tool.

“Use your credit card within your budget and make sure you pay it off each month,” Henry said, adding that credit cards are a great way to have some convenience, earn rewards and build a good credit history.

Scrutinize your fees. As a student, you’re entitled to low-cost accounts with unlimited debit transactions at most banks. Get one of these while you can. (You’ll miss it once it’s gone).

Boost your income. Does your employer pay time-and-a-half on the August or September holidays? Offer to work them. If your school is nearby, offer to stay on in the fall as backup.

Automate your savings. Get paid every other Thursday at midnight? Have your bank move a lump sum of cash from your chequings account to a savings account every other Friday at 9 a.m. You can’t spend money you never had access to.

Generally, working adults are encouraged to save roughly 10% of their gross income. Students however, will need to set aside more.

“For the average student they are going to probably want to save the vast majority of what they earned during the summer months because it’s so concentrated and have that carry them through the following year,” Henry said. “That 10% rule of thumb is a great to aspire to once they’re in a regular working life.”

The best part about putting aside a nice chunk is that you can spend what’s left in your chequings account relatively guilt-free.

Henry suggests taking it even further by topping up your savings every time you make a debit purchase. The bank offers a program that rounds every purchase up to the nearest dollar and throws the excess change into the savings account of your choice. You’d be surprised how a couple of cents at every transaction can add up.

“We see on average it can build up to a couple hundred bucks over the course of the year and it provides a little cushion for folks.”

Grow your cash. Why not toss the extra money you saved into a tax-free savings account? TFSAs are great way to get an attractive return in today’s environment and keep it, all of it, Henry said.

“If you are a student and you earn the bulk of your income over the summer and you’ve got to try and bank that and budget it through the course of the year, why would you want to pay tax on the interest that those savings earn?”

Bob Stammers, CFA, and director of investor education at the CFA Institute, recommends students  sidestep RRSPs in favour of other savings vehicles since young professionals typically have more pressing issues than retirement to deal with, like paying off debt and saving for a house or car.

Get to know your debt. Figure out how much debt you have and what interest rates you’re paying. “In general, you are going to want to minimize debt as much as possible,” Henry said. But not all debt is created equal so it’s important to get some professional advice on how best to manage it.

“A lot of student loans don’t kick in until after you’ve graduated so in some cases that’s good debt to carry until graduation.”

Slash you tuition. “There’s roughly $70 million of scholarships and bursaries that are available to students out there,” Henry said. And not all of them are reserved for A+ students or those with low-income families. Studentawards.com helps match Canadian students all kinds of scholarships.

According to Mercer actuary Malcolm Hamilton, the current crop of young adults is likely to accumulate more student debt, but their education will pay off in the long run. A greater percentage of young people are going to college and university than ever before, and they will find it easier to land good jobs—albeit in a larger, more competitive workplace.

Hamilton admits that the job market is tough, but that’s nothing new. “Weak job markets for young people have been a regular occurrence for some time,” he says. “If you go back to the early ’90s, youth unemployment rates were much higher.”

But what about housing prices? In recent years, the cost of a typical house has soared to five times the average income. Hamilton points out that this phenomenon has been largely fed by astoundingly low interest rates—and low rates actually make homes more affordable: in 1981, 42% of pre-tax household income went toward mortgage payments, and this dropped to 30% in 1991, and 20% in 2001. Now it’s sitting pretty at 24%. “To complain about house prices being high is like complaining about mortgage rates being low,” says Hamilton.

And while recent investment returns have not come close to those of the 1980s and 1990s, today’s twentysomethings have access to far better investing tools than their parents, who grew up in the golden age of high-cost mutual funds and $200 stock trades. Low-cost exchange-traded funds (ETFs) and online brokerages offer tremendous opportunities for young people looking to build wealth over a lifetime.

Shop the sales
Make your dollar go a lot further by gathering up the flyers and doing a little prep work. Involve the kids by giving them a budget for their school supplies and having them figure out how they’ll spend their money for pens, paper and all the other stuff they’ll need.

Do an inventory
Make a list of what your child has and what he needs before you head out to the stores. If last year’s jacket still fits that’s one less expense.

Stick to your guns about what you can afford to spend
Even if she HAS to have those jeans, you can say “No.” She won’t break. You could, of course, allow her to upgrade using her own money to make up the difference between what you’re prepared to spend and the brand she absolutely has to have.

Budget for extra-curricular expenses
The extras such as sports equipment, music books and the like often get left off the list. You’ll likely have to come up with extra money during those first few weeks of school to cover all sorts of activities so don’t spend it all when you’re shopping.

Show your children your budget
You want them to have realistic expectations before you head to the stores. Many parents hate to talk about money with their kids. And they’re dead set against disclosing the realities of their financial circumstances. Then they get ticked when their children don’t show sufficient appreciation for how hard they have had to work to provide those no-name jeans.

Well, if you don’t tell ‘em, how are they supposed to know? Being smart about money isn’t intuitive. It’s learned. And you are your children’s most influential teachers … of both good habits and bad.

-Buy an iPod touch instead of a cell phone, since you can get Skype for free or pay about $14 to get a phone number through them.

-Don’t buy anything without seeing if someone is selling it on Kijiji or Craigslist.

-Search for online coupons and check out local daily deal sites — but don’t buy it just because it’s on sale. Only buy it if you would have bought it at full price.

-Reduce your book budget by downloading textbooks. Try www.coursesmart.com, or Google your textbook online to see if a PDF version exists.

-Instead of buying a laptop, consider buying an iPad. It’s about half the price of a laptop and has many of the same functions.