A guide to student credit cards

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.

Student credit cards usually have a low credit limit to help make sure you don’t borrow too much - this will typically be between £500 and £1,000.

How does a student credit card work?

A student credit card will have a lower credit limit than standard credit cards, 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, 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. If you have a higher credit limit then you’ll likely be charged a higher interest rate on any money you owe. As your credit score improves, you will be able to apply for cards with lower interest rates.

Student credit card eligibility

To be eligible for a student credit card, providers will usually say you need to:

• Be aged 18 or over
• Hold a student bank account with that provider
• Be enrolled on a course for at least 2 years
• Have been living 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 big purchases: you can pay for unexpected purchases up front and spread the cost as you pay back the money you borrowed in monthly repayments
• Higher chance of approval: 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/no borrowing history  
• A borrowing 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 money 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 – this covers you in case an item you order arrives damaged or never turns up

Student credit card – things to keep in mind

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, if 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 and you still make an application that is rejected, this 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.

Tips for managing your student credit card repayments

1. Only borrow what you can afford to pay back
2. Make sure you don’t miss any repayments and you pay at least the minimum monthly repayment amount – if you miss a repayment or don’t pay at least the minimum amount then you’ll be charged a fee, and this can leave a bad mark on your credit report. Marks on your credit report can make it more difficult to borrow money in the future
3. If you do miss a repayment, speak to your lender about a repayment plan
4. Pay the balance off in full each month if you can afford to avoid paying interest
5. Use a student credit card as an opportunity to build your credit score. This can help show lenders you’re a reliable borrower and can make it easier to borrow more in the future

How do you apply for 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 via 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 and your financial situation has changed then you may find you can get a credit card that offers better interest rates and rewards.

Alternatives to a student credit card

If you would prefer a different borrowing method to a student credit card then there are alternatives available.

0% interest overdraft: some student current accounts offer a 0% interest and fee-free overdraft, and offer a similar borrowing limit to student credit cards.

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 select ‘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 see and 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 – this 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.

Where to next? 

What is a good credit score?

Use MoneySupermarket’s Eligibility Checker tool to find out how likely you are to get accepted for a credit card 

6 benefits to getting a credit card