Student credit cards

If you use it responsibly, a student credit card could help you manage your money while you’re at college or university. It’s also a way to start building up a good credit score, which could make it easier for you to apply for a mortgage in the future. Read our guide on what you need to know before you apply.

If you use it responsibly, a student credit card could help you manage your money while you’re at college or university. It’s also a way to start building up a good credit score, which could make it easier for you to apply for a mortgage in the future. Read our guide on what you need to know before you apply.

Alex Hasty
Insurance and finance expert
minute read
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Last Updated 29 APRIL 2022

What is a student credit card?

For many students, a student credit card is typically their first credit card and is likely to be used to make purchases that are paid for over time. It’s specifically designed for young people studying at university or college who aren’t working full time and haven’t yet established a credit history.

Can students get a credit card? 

Yes, as long as you meet the eligibility criteria, you may be accepted for a credit card. You can use our free eligibility checker to see whether you’re likely to be accepted for a standard credit card. But if you don’t have a job or a regular income, you may have a better chance of getting a student credit card.

Student credit cards work in the same way as normal credit cards, but they typically have no annual fee and a low credit limit to help you avoid taking on too much credit.

Your options may also be limited because not many providers currently offer student credit cards, and you’ll usually need to be an existing account holder with the provider to get one. But used wisely, student credit cards can be a flexible way to manage your finances.

How do student credit cards work?

Essentially, a student credit card allows you to spend more money than you actually have at any given time. This often comes in handy when you need to buy something costly for the sake of your studies, such as textbooks or tutoring sessions. You’ll then need to repay what you’ve spent. If you clear your balance in full each month when you receive your statement, you won’t have to pay any interest on the amount you’ve borrowed. If you can’t afford to do this, interest will be added to what you owe. The rate for this will be set by your credit card provider based on your financial circumstances.

Most credit cards for students will come with a pre-determined limit, so you won’t be able to continue spending indefinitely. And you should never borrow more on a credit card than you can afford to pay back. Debt can soon mount up once interest charges start to accumulate.

What are the advantages of a student credit card?

It’s important to understand the advantages and disadvantages of having a student credit card before you apply. 

Advantages can include: 

Building your credit score:  a student credit card can help improve your credit score if you keep up with your minimum monthly repayments. This can make it easier to get credit cards, loans and a mortgage in the future. You can also benefit from better interest rates.

Personal finance skills: learning how to run a credit card account at a young age teaches you important money management skills, including how to get into good spending habits and paying bills on time. This can prepare you well for the future and make you more confident with money.

Spreading the cost of purchases:  You can buy something today, then repay the money over several months, but make sure you can afford to pay it back. If you can, you should pay off more than the minimum each month to clear any outstanding debt as quickly as possible.

What are the disadvantages of a student credit card? 

While there are a number of advantages that come with owning a student credit card, it’s important to consider the disadvantages too. 

Disadvantages can include: 

Debt risk: if you fail to keep up with your monthly repayments, you can land yourself in debt. It can also negatively impact your ability to apply for credit in the future. So, if you think you’d struggle to keep a lid on your spending, it’s best to avoid getting a credit card.

High interest rates: If you don’t pay off the balance of your student credit card in full each month, then you can also find yourself paying high interest rates.
Low credit limits: credit limits are often calculated based on income. This means that they can often be lower than average for students – so you might need to get more funds from elsewhere if you need to make a particularly large purchase.

What should I consider before applying for a credit card?

If you haven’t been offered a student credit card by your bank, ask about your options and whether you’re likely to be accepted for one. Before applying for any credit card, consider: 

  • Your credit score. It’s a good idea to check this before you make an application. As a student, you might not have built up a credit history yet, but if you’ve ever missed a bill payment or been in debt, this could affect your chances of being accepted.

    Use a credit card eligibility checker to avoid applying for cards that you may be declined for.
  • Check the annual percentage rate (APR) as this is how much you’ll be charged in interest if you don’t pay off the balance in full each month. As you pay off the debt, the amount of interest you pay will also reduce.
  • Check all the penalty charges for going over your credit card limit or missing a payment.
  • Consider whether you believe you can use the credit card responsibly or whether you feel it may tempt you to spend more than you should.
  • Check whether there’s an annual fee. Most credit cards for students come without one but it’s better to be sure.
  •  Check the rules on using your student credit card abroad. This is especially important if you’re a frequent traveller.

Who is eligible for a student credit card?

Eligibility criteria for a student credit card will vary from provider to provider. But you’ll generally need to: 

  • Be aged 18 or older.
  • Have been living in the UK for at least three years.
  • Have a student bank account with your chosen provider.
  • Prove you’re currently registered to take a course lasting for a minimum of two years.

Will I need a job to get a student credit card?

Not always, no. But you might need to prove that you’re bringing in a regular income of some sort that isn’t related to your student loan. This could be through a part-time job or a consistent amount paid into your student bank account by your parents. Having said that, there’s no doubt that having a job will improve your chances of getting your student credit card application approved, and it may even result in lower interest rates.

How to manage student credit card spending and repayments

Effectively managing your student credit card spending and repayments is very important if you’re to build a good credit score and avoid any unnecessary fees along the way. Here are some tips:  

  • Pay your statement balance in full: if you do this before the deadline each month, you usually won’t have to pay any interest. If you’re unable to pay the full amount, be sure to repay at least the minimum amount due to avoid penalties.
  • Set up a direct debit: this is a way of making sure you don’t accidentally miss a payment. Money can be automatically taken from your current account to pay the balance or other amount owed on your credit card. Just make sure you’ve got enough cash in your bank account to cover it.
  • Avoid using your credit card to withdraw cash: it’s possible to withdraw cash at an ATM using your student credit card, but it definitely isn’t advisable. If you do this, you’ll face two separate charges – daily interest on the amount you withdraw and a cash advance fee.
  • Avoid going over your credit limit: not only should you avoid going over your credit limit, but you should aim to spend well under it too. The closer you spend to or over your limit, the higher the chances of your credit score taking a knock.
  • Buy big-ticket items on credit: under Section 75 of the Credit Consumer Act, you could get a full refund from your student credit card provider on single purchases over £100 if the item is damaged, doesn’t arrive or the firm goes into administration. But it’s important to note that there’s no guarantee you’ll get your money back. It depends on the circumstances and the terms and conditions of your credit card provider.

What will happen to my student credit card after I graduate?

Most student credit card providers will let you know ahead of the time that your card is set to expire in line with the completion of your course. They’ll often offer to upgrade your student credit card to a standard credit card with better interest rates and rewards, as long as you’ve been using it responsibly. They can also upgrade your student bank account to a graduate account.

This may be a good time to compare your options before accepting the offer from your current provider. As a graduate, especially if you were diligent about managing your credit as a student, you may have access to attractive deals and offers from other providers out there.

Is there an alternative to a student credit card?

If you already have a student bank account, you could be entitled to a student overdraft. This might be a more suitable option than a credit card. An overdraft can be a safety net for emergencies or necessities, and if you use it sensibly it won’t negatively impact your credit score.

Many student accounts will offer interest-free overdrafts during the course of your studies. Assuming you stay within your authorised overdraft limit, you won’t have to pay any interest on that overdrawn balance until after you graduate.

Comparing student credit cards

Compare the Market doesn’t compare student credit cards specifically – but we can help you compare all the credit card options currently available to you. Give it a try now.

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.

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