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Student credit cards

Student credit cards

If you use it responsibly, a student credit card could help you manage your money while you’re studying. Read our guide on what you need to know before you apply…

Anelda Knoesen
From the Money team
minute read
posted 13 JANUARY 2020

What are student credit cards?

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

For many students, a student credit card is typically their first credit card and is likely be used to make purchases. Many providers offer a 0% interest introductory period on purchases, which can be useful for necessities.

What are the advantages and disadvantages 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. If you can, you should pay off more than the minimum each month to clear any outstanding debt as quickly as possible.

Purchase protection: under Section 75 of the Credit Consumer Act, you can get a full refund from your card provider on single purchases from £100 to £30,000 if the item is damaged, stolen or doesn’t arrive.

Discounts: some student credit cards also come with exclusive discounts that can help you to save money while you’re studying, such as a Tastecard which offers discounts at restaurants or a Railcard that gives you a third off most rail fares in England, Scotland and Wales.

Spreading the costs of purchases: you can buy something today, then repay the money over several months.

Disadvantages can include:

Debt: If you fail to keep up with the monthly repayments, you can land yourself in debt. If you don’t pay off the balance in full each month, then you can also find yourself paying high interest rates. This can negatively impact your ability to apply for credit in the future.

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, there are a few things you should consider:

  • Check your credit score.
  • Use a credit card eligibility checker to avoid applying for cards that you may be declined for.
  • Check the annual interest rate as this is how much you’ll 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 of the penalty charges if you go over your credit card limit or miss a payment.
  • Never spend more than you can afford to pay back.

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, which maybe 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.

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