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- What is a student credit card?
- How do student credit cards work?
- Advantages of student credit cards
- Disadvantages of student credit cards
- Am I eligible for a student credit card?
- Can I get a student credit card if I don’t have a job?
- Can I get a student credit card with bad credit?
- How to apply for a student credit card
- How to use a student credit card
- Is a student credit card right for me?
- What are the alternatives to a student credit card?
- Student credit card frequently asked questions
It can be difficult to get accepted for a credit card without a credit history or regular income, which means many of the best credit cards can be out of reach to students.
Student credit cards are different. They don’t have such strict eligibility criteria and, if you manage it well, a student credit card could make it easier to get credit – including loans and a mortgage – in the future. However, you can get trapped in a cycle of debt if you don’t stay on top of your regular repayments.
What is a student credit card?
A student credit card isn’t really any different to a regular credit card, other than the fact it’s available to students who often have a low income and little credit history.
As a result, credit cards for students often have a lower credit limit and come with fewer rewards and perks – and sometimes have higher interest rates, too. It may also be necessary to have an existing student bank account with a provider to be eligible for a student credit card.
Sometimes it’s possible to get a regular credit card as a student, but you may only be able to do so if you have a regular income and a good credit score.
How do student credit cards work?
You can use a student credit card in the same way as any other payment card: to make payments in-store using contactless or chip and PIN, or online in the same way that you would use your debit card. Most cards can also be added to a digital wallet such as Apple Pay or Google Pay.
The crucial difference is that where a debit card takes your money directly from your bank account, how a credit card works is as a way of borrowing money from the provider. When you spend with your credit card you will have to repay at a set amount (known as your ‘minimum payment’) each month, along with interest and sometimes other charges, such as transaction fees if you use your card overseas or withdraw cash from an ATM.
Credit cards also have a ‘credit limit’, which is the maximum amount you can borrow. However, this doesn’t mean you should spend right up to your limit. There are a few reasons for this:
- If you accidentally overspend you will have to pay an over-limit fee, and doing this will also damage your credit score.
- You will be charged interest on everything you spend, and this can quickly mount up.
- Keeping your credit utilisation (the percentage of your available credit that you are using low can improve your credit score, so you will stand a better chance of getting credit, and the best interest rates and offers, in future.
Advantages of student credit cards
Some people are nervous about using credit cards and getting into debt, but they do have some advantages when used responsibly:
- They can be a useful way to cover unexpected expenses or emergency costs.
- You can use them to spread the cost of large purchases by repaying the money over a few months.
- You may not be charged interest for up to 56 days after you make a purchase. So if you’re able to repay what you spent during that time, you won’t be charged interest.
- Provided you stay within your credit limit and make payments on time, a credit card can help to build your credit score.
- Anything you buy with your card that costs between £100 and £30,000 will be automatically covered by Section 75 of the Consumer Credit Act 1974, which means you can probably claim back your money from your card provider if a retailer goes bust, you receive faulty goods or your order never arrives.
- Some providers offer extra perks, such as cashback or rewards when you use your card.
Disadvantages of student credit cards
Before you apply, it’s important to be aware that student credit cards also have some disadvantages:
- Student credit cards often have lower credit limits than other types of credit cards, typically around £500 to £1,500. This means you may not have enough available credit to fund a large purchase.
- Unless you clear your balance in full each month, you will be charged interest. Over time, these charges can add up and increase your debt.
- You may incur charges if you use your card overseas, miss or make a late payment, or exceed your credit limit. You will also be charged a transaction fee if you withdraw cash from your card at an ATM, and are likely to be charged a higher rate of interest for this than you would from making a purchase. Read the terms and conditions carefully so you can avoid these where possible.
- If your application is rejected, perhaps because you don’t have a regular source of income, this will leave a mark on your credit file which can make it more difficult to get credit in the future.
- You could end up in debt. Think carefully about why you need a credit card, and whether you can resist the temptation to spend more than you can afford to repay.
Am I eligible for a student credit card?
It can be difficult to get a credit card if you have a limited credit history, but student credit card providers take this into account.
As a starting point, you need to be:
- Aged 18 or over.
- A UK resident.
- Studying at a UK university, on a full- or part-time basis.
- You may need to have a student bank account with your chosen provider.
- Not declared bankrupt, have County Court Judgements or be subject to an individual voluntary agreement.
If you meet all the basic criteria, the next step is to use an eligibility checker, which can give you an idea of how likely you are to be accepted, and even what credit limit and APR you’re likely to be offered. Unlike making a direct credit card application, this won’t show up on your credit report, so other lenders won’t be able to see any evidence of your search.
Before you apply properly, it’s also wise to check your credit score. This is a three- or four-digit number that lenders can use to decide whether to offer you credit.
Several factors can impact your score, such as missed or late payments, defaults, high use of credit, or a limited credit history. If you spot any errors, you can then ask for them to be corrected, or take steps to improve your score – which can be as simple as making sure you’re on the electoral roll.
You can check your credit score for free with credit reference agencies like Experian and Equifax, or via platforms like ClearScore and Credit Karma.
Can I get a student credit card if I don’t have a job?
As student credit cards are designed to be used by full-time students, having a job isn’t necessarily a requirement. However, it can increase your chances of being accepted if you have some form of income other than a student loan. This income could come from holiday work, a part-time job or even money from your parents.
Can I get a student credit card with bad credit?
As student credit cards have less stringent eligibility requirements than other types of credit cards, you may still be able to get one even if you don’t have a high credit score – particularly if your score is low because you’ve never had credit before.
However, you may struggle to be accepted if you have a history of missed payments or defaults, which is why it’s so important to check your credit score regularly and take steps to improve it.
How to apply for a student credit card
You can usually apply for a credit card either online, via your banking app, or in person at a branch of the relevant bank. As providers typically only offer student credit cards to existing customers, the application process should be quick and easy. If you don’t yet have a student bank account, you will need to apply for that first, and you may then need to wait a few months before you can apply for a credit card.
You will need to provide some information so that the provider can run a credit check. This will typically include:
- Your contact details.
- Your address (including all addresses for the last three years).
- Your bank account details.
- Your income.
You could get an instant decision when you apply online, but the approval process varies between lenders so you may have to wait a few days to find out if your application has been successful.
If your application is approved, the next step is to sign a credit agreement. Usually, you can do this digitally if you apply online, or you will be sent paperwork to sign and return. Remember to check your credit limit, APR, any fees and charges and the minimum monthly payment as these might have changed since you first applied.
Don’t sign until you’re happy with everything, as you can walk away with no obligation. Even if you change your mind after you’ve signed, you have a 14-day cooling-off period. It means you can cancel the agreement without explaining why – but you will need to repay any money you’ve spent on the card, plus any applicable interest and charges.
Although it’s tempting to try again straightaway if your application is unsuccessful, it’s best not to do this. Each application will leave a mark on your credit report, giving lenders the impression that you’re experiencing financial difficulties, and making it harder for you to get credit in the future.
Instead, check your credit report to see what you could do to improve your chances of being accepted in the future, and use an eligibility checker to reduce the risk of being turned down again.
How to use a student credit card
The following tips will help you to make the most of your student credit card:
DO stay within your credit limit
As student credit cards often have lower credit limits than other cards, it can be easy to overspend. If you exceed your limit you will have to pay an over-limit fee (typically £12), and it will also leave a mark on your credit report, which can make it harder for you to get credit in the future.
DON’T borrow more than you can afford to repay
It’s tempting to treat a credit card like ‘free money’, but think carefully about when and why you plan to use it, as you’ll have to repay what you borrow with interest. This can quickly add up, making it harder for you to meet the monthly repayments on a student income.
DO pay more than the minimum monthly payment
If you only make the minimum payment, you could find yourself paying for those new trainers, night out or holiday for years to come. That’s because the minimum payment covers little more than your interest and charges, which means it takes much longer to pay down your debt.
You might find it helpful to work out what you can afford to repay each month and set up a fixed monthly direct debit for that amount, making sure that you’re always paying a little more than the minimum.
DON’T use your credit card to withdraw cash
When you use your credit card at a cashpoint, your provider will not only charge you a transaction fee, but may also charge you a higher rate of interest. Cash withdrawals, also known as cash advances, can also create the impression that you’re short of money, and it can hurt your credit score if you do this regularly.
Bear in mind that the same charges often apply to using your card to pay utility bills, top up mobile currency or buy foreign currency – so check your terms and conditions carefully so that you’re not hit with unexpected charges.
DO take advantage of purchase protection
One of the big advantages of paying by credit card is that anything you buy that costs between £100 and £30,000 will be protected under Section 75 of the Consumer Credit Act 1974.
This means you could claim your money back if the item is faulty, doesn’t arrive or the company you bought from goes into administration. For this reason, paying for electronics, event tickets and travel or accommodation with a credit card will give you some extra consumer protection and peace of mind.
DON’T miss a payment
If you pay your monthly bill late or miss a repayment altogether, a late payment charge will be applied to your account, and it will also hurt your credit score. If you think there’s a chance you could forget to pay your credit card bill, protect your credit rating by setting up a direct debit so that the payment is taken automatically. If you’re short of money and don’t think you can afford to pay, contact your provider as soon as possible so that they can help you work out an affordable repayment plan.
Is a student credit card right for me?
Even though a student credit card can be a handy way to spread the cost of an expensive purchase, it doesn’t mean it’s the best option for you.
If you’re confident that you won’t overspend and will keep up with the monthly payments, a student credit card can help you build a good credit history – but it’s not the only way to do this. For example, having a mobile phone contract or utility bill in your name, managing a student overdraft and simply being on the electoral roll (which is easy to overlook when you first move to university) will all help build your credit history.
If money is tight, as it often is when you’re a student, a credit card can seem like a good way to get your hands on some extra cash while you’re waiting for your next student loan payment to come through. However, you should think carefully before you apply and work out if you can afford to make the monthly repayments. If you’re not confident that you can afford to do this, you could find yourself in a much worse position a few months down the line.
It’s important to consider all your options including seeking free debt help from charities such as:
What are the alternatives to a student credit card?
Most student bank accounts offer student bank accounts with a 0% overdraft. The amount you can borrow will depend on your circumstances and how far you are through your course, but this is usually a cheaper way to borrow than a student credit card.
Although some companies offer loans to students, these are best avoided as they typically charge very high interest rates.
Instead, check with your university or UCAS to find out what support is available and whether you are eligible for any scholarships, grants and bursaries or hardship funds.
Student credit card frequently asked questions
No, it’s not essential to have a student credit card. However, if you’re confident that you can resist the temptation to overspend, it can be a useful way to spread the cost of bigger purchases, while helping to build your credit history.
Student credit cards are often a better option for students simply because the eligibility criteria are more relaxed – so full-time students on low incomes are more likely to have their applications accepted. However, if you have a good credit history and a regular income you may be eligible for other credit cards which offer additional benefits such as cashback or rewards, along with a preferential interest rate and higher credit limit.
Yes, you may still be eligible to get a student credit card, as providers realise that students may be trying to access credit for the first time. However, without a credit history, providers often prefer to lend to existing customers, so to increase the chance of a successful application you may need to apply for a student credit card at the bank where you hold your student account.
You will still be able to use your card when you graduate – and you will need to continue making your monthly payments. However, if you’ve managed the card well you may now be eligible for a better deal, so could apply for a different card with more perks or rewards, a lower interest rate, and a higher credit rate – particularly if you start to work and your income increases.
You can apply for a credit card with any provider you wish, but not many offer credit cards for students so you may find it a challenge to meet their eligibility criteria, particularly if you don’t have a credit history or regular income. You may find that you have a better chance of being accepted if you apply for a student credit card with your existing account provider.
In the UK, student loans aren’t usually counted towards your income when applying for a credit card, as they are considered another form of borrowing – so you would be using one type of debt to repay another.
No, your student loan does not appear on your credit report so it won’t affect your score. This is because, when you start to repay it, it is deducted directly from your salary, making it impossible to miss repayments.
Student credit cards often have a lower credit limit than other types of cards, because students usually have a lower income. Your credit limit will depend on your personal circumstances, but is likely to be between £500 and £1,500.
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