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A guide to student credit cards

Everything you need to know about student credit cards

There’s plenty of choice when it comes to credit cards, with some designed specifically with students in mind. Read on to find out more.

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Credit cards can provide a number of benefits for students, such as more flexibility with spending, learning how to budget responsibly and building a credit history – which will help for later in life including when it comes to getting a mortgage.

But credit cards also come with risks, the main one being a build-up of debt if you don’t pay off what you owe, or at least make the minimum monthly repayments on time.

Used wisely they can be a useful asset, and you can even make them work to your advantage by gaining cashback and loyalty points.

Can a student get a credit card?

Yes, and there are even credit cards designed specifically for those who might be studying at university or college, 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?

Like any credit card, a student credit card is a way of spending money you don’t yet have.

Credit cards approved for students tend to have lower spending limits than standard credit cards, and will often charge a higher interest rate on the money you borrow.

This is even more reason to use them responsibly and pay off the outstanding balance in full every month.

What credit limit and interest rate will I get with a student credit card?

The credit limit and interest rate you’re offered will depend on your borrowing history and finances. As a student, this probably won’t be extensive, but as your credit score improves, you should 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, you will usually need to be:

  • Aged 18 or over
  • Hold a student bank account with that provider
  • Enrolled on a course for at least two years
  • Have lived in the UK for at least three years

Why should I get a student credit card?

There are a number of reasons you may wish to get a student credit card. These can include:

  • Interest-free period: Some providers offer an interest-free period for a limited time for purchases – normally a few months, giving you some time to pay off the balance. But make sure you know when this period ends so you pay off the outstanding amount, or interest charges will mount up
  • Protection on purchases: A student credit card will offer the same level of purchase protection as standard credit cards. Under section 75 of the consumer credit act you’ll be covered if you buy goods worth between £100 and £30,000 if they fail to turn up, are not as described, or the company goes bust
  • 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. This can make it easier to get credit cards, loans and even a mortgage in the future
  • Rewards: Some providers offer rewards when you spend, including cashback, loyalty points or cheaper railcards. Used wisely, you can make a student credit card work financially for you
  • No annual fee: Student credit cards typically won’t charge an annual fee

There are other potential benefits that may be worth considering, but only if you use the student credit card responsibly:

  • 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. However, unless your card is within its interest-free period, you will likely end up paying more in interest
  • 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
  • The possibility to borrow more: Some providers will increase your credit limit if you continue to manage your monthly card repayments well

There are also certain risks to be aware of when getting a student credit card, including:

  • High interest rates: Higher interest rates than standard credit cards mean you’ll end up paying more if you don’t clear your balance each month
  • Lower credit limits: Although a lower credit limit can stop you from overspending, the amount you’re able to borrow will be less
  • Fees: As with regular credit cards, 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, a rejected application can affect your credit score

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.

You may need to open a student bank account with the provider before being able to apply for the student credit card.  

Some banks even insist an account is open for a few months, so you may not be able to get a credit card straightaway.

Why do banks charge more interest on student credit cards?

Students don’t usually have a high or guaranteed level of income. Banks see this as increasing the chance that they won’t be able to pay back the money they borrow, and raise the interest rate to cover the higher risk. 

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.

What should I put for income on my application?

If you receive income from a part-time job, regular support from your parents or financial aid that is not in the form of a loan, it can all be counted towards income.

Student loans tend not to count as income because if you used it to pay off a credit card, this would just be one form of debt paying off another.

Can you use student loans to pay off credit cards?

Credit cards tend to be more immediate debt charged at a higher interest rate than student loans.

If you have no other means of clearing your balance then using part of your student loan to pay off your card balance might seem sensible.

But if you are in this situation, you should consider assessing your finances.

Your student loan is likely to be supporting you to pay for accommodation and other essentials while you are studying, and using it to pay off your credit card might leave you with a shortfall in other areas.

How can I use my student credit card to improve my 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’ll be able to build your credit rating.

Here are some guidelines 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

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.

What are my alternatives to a student credit card?

An alternative to a student credit card would be a current account with an 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.

Comparing student credit cards

You can compare credit cards you’re likely to be approved for using our 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.

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