Guide to student credit cards

Student using their credit card to buy food

A student credit card is probably the first credit card you’ll have. Here’s everything you need to know about them – and some practical tips on how to use them properly.

What are student credit cards?

Student credit cards are designed to be used by full-time students who may often need a little extra money to help them get through the month; it’s not there to be used as an alternative to a student loan, or to provide extra income which a second job could help with.

Student credit cards are helpful to get you on the first rung of the ‘credit score ladder’; they’re for people who don’t have a credit score, or don’t have a credit score which allows them to get a regular credit card.

How to get a student credit card

Start by looking around for the best deals on student credit cards; your bank may offer you a credit card if you already have an account with them, but other lenders may also offer competitive deals on cards.

Some providers may say that you need to have an account with them before they give you a credit card – if this is the case, you’ll have to open the account first. Other lenders will stipulate that you have to have an account with them for a minimum time before you can get a credit card.

Your bank or building society will ask you to confirm the following:

  • You’re studying, or about to start your studies
  • You’re 18 or over
  • You are a UK resident
  • You have no previous large debts (not including a student loan)

The bank offering a student credit card will also need proof of income; this can be either an allowance or the salary from part-time work. However, you can also find cards that will allow you to pay them off using your student loan.

Do I need a student credit card?

It depends entirely on your circumstances. If you’ve worked out your budget and you think you’ll be able to live well on your student loan and, potentially, income from a second job, you may not need one.

However, if you may need a little extra money from time to time, a credit card can be helpful – if you don’t overspend and you’re able to pay off the balance every month, a credit card can be a very useful financial tool to help with regular expenses.

Student credit cards may offer lower interest rates and added bonuses, such as gadget insurance or travel insurance; some cards also offer cashback on purchases.

However, one reason that many people get a student credit card is to help them start building a credit score. By using a credit card to make small purchases that are cleared each month, your credit score can begin to grow.

What should I look at when I’m choosing a student credit card?

When you’re choosing your card, it’s a good idea to take the time to find out:

  • What the APR is –(this is the amount of interest you pay on your outstanding balance)
  • The charges for late or missed payments
  • If there are any annual fees, and if they’re paid monthly or annually
  • What the minimum payment is
  • If it’s a 0% interest card, find out when the lender starts to charge interest
  • How much you can borrow every month

What are the limits on student credit cards?

Limits tend to be fairly low to discourage excessive spending; on average, student credit cards will normally let you borrow between £500 and £1500 every month.

Do student credit cards affect my credit score?

While it might not seem that important while studying, when you graduate and start a career, many major purchases depend on your credit score - such as buying a car, or new appliances for a flat.

Your credit score can also dictate how much you can borrow, or the interest you pay on a loan.

Some credit card providers may note how responsibly you are using the card, such as making timely payments or paying more than the minimum payments. If you’re using your card responsibly, this will contribute towards building a healthy credit score as a student.

Student credit card charges

A credit card isn’t always about just paying what you’ve spent on the card itself; there’s also the APR (Annual Percentage Rate).

For this reason, the best way to manage a credit card is to clear the balance in full each month. Many people will look for a low APR when choosing their credit card provider.

You might find there’s also a fixed fee for having the card. Before you apply, find out if there is a fee and bear in mind that this could be charged monthly, or set up as one payment to cover the year (usually around the date that you originally signed up).

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