Graduate credit cards

Once you’ve left student life behind, you’ll want to start building up a good credit score for the future. While you can’t get specific graduate credit cards, used responsibly, other types of credit card could help you do this.

Here’s our guide to credit cards for graduates and pitfalls to watch out for.

Written by

The Editorial Team

Experts in personal finance, insurance and utilities

Posted

2 OCTOBER 2024

8 min read

Why do I need a credit card as a graduate?

Used the right way, a credit card can be an incredibly useful tool for building your credit score.

As a young graduate, just out of uni, you might not have had chance to build up much of a credit history. If that’s the case, you’ll have a low credit score.

Your credit score is used to assess your reliability as a borrower. It can have a huge impact on the financial products available to you. For example, if you’re looking for car finance, a loan or a mortgage, a low credit score will severely limit your options.

If you already have a good credit score from paying household bills on time, you’re in a stronger position to access better credit card deals with lower interest rates.

You may be thinking it’s far too early to be worrying about long-term financial commitments. But graduating is the perfect time to start building up your credit score for the future.

If you don’t overspend and always make your repayments on time, a credit card can be a good way to manage your finances.

What are the best graduate credit cards?

Unlike dedicated credit cards for students, you can’t get a specific ‘graduate credit card’.

However, there are credit card options available for graduates that could suit your needs and financial situation. The best one for you will depend on how you intend to use the card and your individual circumstances.

As a graduate, there are a few credit card options you might want to consider:

Credit builder credit card

If you have a low credit score or have never had a credit card before, you have a better chance of being approved by a lender if you apply for a credit builder credit card.

Interest on the amount you borrow tends to be higher than for a standard credit card. You may also find that your credit limit is much lower.

But if you can manage to pay off the full balance each month, you won’t have to pay interest. Used responsibly, a credit builder card can help you build your credit score over time.

0% purchase credit card

A 0% purchase credit card allows you to pay off what you owe over a set period without added interest. It could be a good way of spreading larger costs over a longer period.

However, you should make sure you pay off the full balance before the 0% introductory period ends. After that, you’ll be charged a high interest rate on the remaining amount.

Travel credit card

If you’re planning to take a year out to travel after you graduate, a travel credit card could help you save money when spending abroad.

Travel credit cards don’t usually come with international fees when used abroad. They also tend to offer better exchange rates than standard debit or credit cards.

Cashback and rewards cards

These type of credit cards offer rewards for using them. Depending on the card, you could earn perks such as cashback, discounted holidays, air miles, shopping vouchers and even concert tickets.

Just watch out for the APR (Annual Percentage Rate). This is how much interest, fees and charges will cost you for borrowing over a year. The APR on rewards cards can often be higher than for standard credit cards. Some may also charge an annual fee, which could outweigh your rewards, so always read the small print.

Balance transfer credit card

This lets you move existing credit card and store card debts onto a lower interest or even 0% interest credit card.

There’s usually a transfer fee to pay – typically between 1% and 4% of the amount you’re moving across.

If you’re offered a 0% period, just make sure you pay off the full balance before it ends. After that, you’ll be charged interest, which could be pretty hefty. Also, you’re likely to need to pay the minimum payment each month to avoid being charged interest before the end of the 0% period.

What are the pros and cons of getting a credit card as a graduate?

Before you decide, it’s important to weigh up the pros and cons of credit cards to help you make the right choice for your situation.

Depending on the one you choose, a credit card can offer a number of benefits. But there are also drawbacks to consider.

Pros

Build your credit score
Could help you learn to budget and manage your finances
Earn rewards
Spread the cost of purchases
Possible 0% interest on spending
Save money when spending abroad
Safer than carrying cash
Protection from fraud
Purchase protection on certain items.

Cons

Late payments incur fees and can damage your credit score
Options are limited if you have a low credit score and existing debts
Interest charges can be high
Your credit limit may be fairly low
Purchase protection isn’t guaranteed
You could build up debt that gets out of control.
Temptation to spend money you can’t afford to pay back.

What should I consider before applying for a credit card?

Before you apply for a credit card, there are a few important things to look out for.

When you’re ready to compare, you’ll want to consider:

APR – you might not get the advertised APR. This is a representative APR, which only needs to be offered to 51% of new customers. The lowest APR rates are usually reserved for those with the best credit scores. The APR you’ll get depends on your individual credit rating.

Credit limit – this is the maximum amount you can spend on your credit card. If you don’t have much of a credit history, it’s likely that your credit limit will be fairly low. But if you can manage your payments effectively, this could increase over time.

Fees – always read the small print to understand what fees and credit card charges you might need to pay. These could include late payment fees, cash withdrawal fees, international fees and charges for going over your credit limit.

Top tip
Avoid using your credit card to withdraw cash from ATM machines. You’ll be charged a cash withdrawal fee as well as interest. This will be charged as soon as you get the money, even if you pay off your balance in full. Use a debit card to take out money instead.

How hard is it to get a credit card as a graduate?

Your credit card options will depend on your credit history. If you have a good income, a decent credit rating and no debt, you’re likely to find it easier to get accepted for a credit card than someone without a regular income or a solid track record of paying off debt.

Lenders need to be confident about your ability to afford your repayments, so will look for evidence that you’re a reliable borrower.

Ultimately, your eligibility will depend on the lender’s specific criteria. To apply for a credit card in the UK, you’ll typically need to be:

Over 18 years old
A UK resident
Registered to vote
Earning a regular income (depending on the lender, this may need to be over a certain amount).

Before you formally apply for a credit card, use our eligibility checker to see which credit cards you’re likely to be accepted for without harming your credit score.

Check your eligibility

Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.

How can I build my credit score as a graduate?

Building a good credit score can take time, but it’s easier than you may think. Here are just a few ways to build your credit score as a graduate:

Register to vote – credit card providers use the electoral roll to confirm your name and address. If you haven’t done so already, get on the register to vote.
Put some bills in your name – having a phone contract or utility bills that you pay for monthly in your name is a great way of establishing a credit history.
Pay on time, every time – late payments will be marked on your credit file. Punctual payments will show lenders you’re a reliable borrower and can manage your finances.
If you’re turned down, don’t keep applying – every time you formally apply for a credit card, it will be marked on your credit file. Multiple applications over a short period of time may suggest you’re desperate for money and will harm your credit score.

Discover more ways to build your credit score.

Other credit options available for graduates

A credit card isn’t your only option as a graduate.

If you have a student bank account, most banks will let you upgrade to a graduate account once you graduate. Some accounts offer 0% interest overdrafts, which can last up to three years.

If you can successfully manage your account, it’s a great sign for lenders that you can be trusted as a reliable borrower. This could help you access better deals with lower interest rates in the future.

You don’t have to stick with your current bank to open a graduate account. Shopping around, you might find a better graduate bank account elsewhere.

Find out more about switching from a student account to a graduate bank account.

Compare credit cards

Looking for a credit card that’s suitable for graduates? Start a comparison with us today and see what you could be eligible for. Our eligibility tool is a soft credit search, so it won’t impact your credit score in any way.

Try our credit card eligibility checker

Frequently asked questions

What happens to a student credit card when you graduate?

Once you graduate, your student credit card won’t automatically stop working. You can decide to keep using it or close your account after paying off your debt.

Your bank may even offer you a standard credit card with better interest rates and rewards.

But you don’t have to stick with your current provider. In fact, now is a good time to shop around and compare your credit card options. You might find a better deal elsewhere.

Can I get a credit card if I’m unemployed?

If you’re struggling to find work after you graduate, it’s still possible to find a credit card. For example, if you’re on benefits, these may be counted as income.

Ultimately, lenders want to be sure you can afford to make your repayments. If you’re unemployed, you might have to accept a higher interest rate and lower credit limit.

What credit limit will I get as a graduate?

The credit limit you’ll get depends on how much you earn and your credit score. If you have a low income and low credit score, your credit limit will be lower than someone with a steady income and a good credit score.

Your credit limit will be included in the information you’ll get when you receive your credit card. It will also be on your monthly statement and you might be able to view it via your banking app if you have an online credit card account.

How can I improve my credit score with a graduate credit card?

There are two simple rules for building up your credit score with a credit card:

Pay on time, every time – setting up a direct debit could help you avoid late or missed payments.
Keep your credit utilisation low – this is how much of your credit limit you use. Ideally, you should try to keep your credit utilisation ratio below 30%.