What is a student credit card?
A student credit card is designed for full-time college and university students who want to borrow from a bank or a building society, but don’t yet have the credit score and income to be approved for a standard credit card.
How does a student credit card work?
A student credit card will have a lower credit limit than a standard credit card, and it will often charge a higher interest rate on the money you borrow. This means you will likely have to pay back more interest than if you were to borrow using a standard credit card.
Banks and building societies charge more interest on student credit cards because students typically won’t have a high or guaranteed level of income. That means there’s a risk the student won’t be able to pay back the money they borrow. So student credit card providers increase the interest rate to cover that increased risk.
The credit limit and interest rate you’re offered will depend on your borrowing history and finances. As your credit score improves, you will be able to apply for cards with lower interest rates.
Who is eligible for a student credit card?
To be eligible for a student credit card, providers will usually require the following:
- You’re aged 18 or over
- You hold a student bank account with that provider
- You are enrolled on a course for at least two years
- You have lived in the UK for at least three years
Advantages of a student credit card
The benefits of a student credit card include:
- Spread the cost of purchases: You can pay for large purchases up front and spread the cost by paying back the money you borrowed in monthly repayments
- Higher chance of approval: While you are studying, you may find it’s easier to get a student credit card than a standard credit card
- Build your credit score: Managing your student credit card repayments can help you build your credit score, particularly if you haven’t taken out credit before and have a limited borrowing history
- A low credit limit: A low credit limit stops you borrowing more than you can afford to pay back
- The possibility to borrow more: Some providers will increase your credit limit if you continue to manage your monthly card repayments well
- Interest-free period: Some providers offer an interest-free period for a limited period of time, which means if you pay the balance back in full by then, you won’t pay any interest. Any spending you put on your credit card after this will be charged interest
- Rewards: Some providers offer rewards when you spend, including cashback and loyalty points
- No annual fee: Student credit cards typically won’t charge an annual fee
- Purchase protection: A student credit card will offer the same level of purchase protection as standard credit cards. Under the Consumer Credit Act section 75 you’ll be covered if you buy goods worth between £100 and £30,000 and they fail to turn up, are not as described, or the company goes bust
Student credit card disadvantages
The disadvantages of a student credit card include:
- High interest rates: Higher interest rates than standard credit cards mean you’ll end up paying a high amount of interest if you pay back the money you owe over a longer period of time
- Lower credit limits: Although a lower credit limit can stop you from overspending, the amount you’re able to borrow may not be enough for what you need
- Fees: You will most likely be charged a fee if you use your student credit card to withdraw cash, if you make a late repayment, you go over your credit limit or if you use your card abroad
- Rejected applications can affect your credit score: If you don’t meet the lender’s borrowing criteria for a student credit card, a rejected application can affect your credit score
Do you need a job to get a student credit card?
You may not need a job to get a student credit card, but you will often need to show you have a regular income that doesn’t include your student loan. This could be regular payments from your parents or a salary from a part-time job.
How to manage your student credit card repayments and credit rating
Whether you’re a student or not, the golden rule for managing your credit card remains the same: don’t spend beyond your means, and keep up with your repayments. If you can do that, you will be able to slowly but surely build your credit rating.
However, because students tend not to be in full-time or highly paid work, they are less attractive to lenders and at more risk of losing control of their finances. As a result, there are other guidelines you are strongly advised to follow:
- Only borrow what you can afford to pay back
- Make at least the minimum repayment each month
- Try to pay off the card in full each month
- Keep within your credit limit
- Avoid using your credit card for cash withdrawals
- Check if there are extra fees to use your card abroad
How do you get a student credit card?
You can apply for a student credit card through a bank or building society, either online, over the phone, in branch or through the post.
If a provider says you need to have a student bank account with them before applying for a student credit card then you will need to open the account first.
Some student bank account providers will say you’ll need to have had your bank account for a few months before you’re able to apply for a credit card. So you may not be able to apply for a credit card as soon as you open your account.
What happens to your student credit card when you graduate?
You’ll still be able to use your student credit card once you graduate. But if you’ve managed your student credit card well you may be able to get a credit card that offers a better interest rate, 0% interest on purchases or balance transfers, cashback or rewards.
Once you have a job with a regular salary you’re likely to have a much wider choice of credit cards.
Alternatives to a student credit card
If you would prefer a different borrowing method to a student credit card then there are alternatives available.
Current account overdraft: Most student current accounts offer 0% interest and fee-free overdraft. How much you can borrow on your overdraft will depend on your year of study and personal circumstances.
Low APR credit card: A low-APR credit card or 0% interest purchase card can offer better interest rates on your credit card spending. But you’ll usually need to have a higher income and a good credit score to be approved.
Comparing student credit cards
You can compare credit cards you’re likely to be approved for using MoneySuperMarket’s eligibility checker. Select what you want to use the credit card for, or pick ‘Show me everything’ if you’re not sure. You’ll then need to fill in a few details about yourself and your finances – when it comes to ‘Your employment status’, select ‘Other’ and then ‘Student’ from the dropdown list. Enter any part-time salaries or regular income you receive from your parents in the ‘Income’ field. You’ll then be able to compare the credit cards you could get as a student.
Using the eligibility checker won’t affect your credit score. But if you make an application for a credit card with a provider and you’re rejected, it can affect your credit score.
If you have a student bank account with a provider and they offer student credit cards then you can check you meet their borrowing criteria and apply directly through them.