A guide to student credit cards
By Anita Shargall, last updatedThere’s a huge array of credit card options on the market. Whether it’s a credit card that offers cashback or one that offers 0% on purchases, it’s crucial to know what to look out for when applying for credit.
Here are five steps on how to apply for a credit card, along with tips on what to bear in mind at each stage:
Work out which card best suits your needs
First of all, it’s vital to assess what you need a credit card for.
You might be trying to clear an existing debt and therefore require a 0% balance transfer card, or you might want to receive something back on your spending through a cashback or reward card.
If you’re unsure what type of card you need, our handy credit card decision tree can help guide you.
Some banks, like NatWest, RBS and Halifax, have specific credit cards targeted at those who are in full-time education over the age of 18.
These cards usually have high interest rates - up to 19.9% APR - and a credit limit of around £500.
Can you get a ‘normal’ credit card?
It’s not impossible, even as a student.
You may struggle to access standard credit cards but it depends on your financial history. If you’re an older student or have a regular stream of income then you may be able to pick from a wider range of cards.
Use our Smart Search tool to check how likely you are to get a card. It doesn’t leave a mark on your credit file (so lenders won’t see that you’ve been applying for credit) and it gives you an estimation of how likely you are to get the card.
If you can afford to, it’s best to pay off your balance in full every month as that way you won’t be charged any interest.
Five credit card golden rules
If you do decide to get a credit card while you’re a student, follow these five golden credit card rules to make sure you don’t get caught out.
1. Try to pay the balance off in full each month
If you can afford to, it’s best to pay off your balance in full every month as that way you won’t be charged any interest.
If you start paying interest, the cost of borrowing can get very expensive.
2. Never miss a repayment
If you can’t afford to pay off the balance in full each month, try to make at least the minimum monthly repayment on your credit card, preferably more. Set up a monthly direct debit for this amount, so you always pay on time.
If you can’t do this, you’ll need to call up your lender and discuss a repayment plan. If you do miss a payment, you’ll typically be charged a late payment fee of around £12.
What’s more, it could leave a mark on your credit file for three years and this could affect your likelihood of getting credit in the future.
3. Build up your credit rating
If you pay off your balance in full each month and never miss a repayment, a credit card is the perfect way to prove to lenders that you’re reliable when it comes to paying back debt.
This will be useful in the future, when it comes to apply for more credit, for example a mortgage or loan.
4. Never use your credit card to withdraw cash
You can use a credit card to withdraw cash from an ATM in the same way you can with a debit card, but it can be very expensive.
Firstly, you’ll be charged a withdrawal fee of 3% or thereabouts. Secondly, cash withdrawals attract a higher rate of interest than purchases – and you’ll be charged interest from the moment you withdraw your cash.
So it’s best to avoid using a credit card at an ATM.
5. Enjoy purchase protection
One of the biggest benefits of having a credit card is that it offers more protection on purchases than a debit card. This means that if your item is faulty, never turns up or the company goes bust before they deliver it, you can claim a refund from your credit card provider.
It applies to purchases that cost between £100 and £30,000, even if you just put a deposit on the card.
Where to next?
6 benefits to getting a credit card