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Student credit cards
Everything you need to know about credit cards for students
Updated 10 June 2024
Heading off to uni is a milestone – marking the start of real financial independence for many. Used right, student credit cards can be a useful budgeting tool that helps build your credit profile, but get it wrong and it can burn. This guide covers what student credit cards are and if getting one is the right option for you.
What is a student credit card?
A student credit card is just a credit card that accepts students, so usually just comes without the same income and credit score restrictions as traditional cards.
As you're likely to have a low (or no) income and little credit history, credit cards that accept students tend to have low credit limits (the total amount you can spend on them, for example £500), and some may have high interest rates.
Who's this guide for? Students who are considering getting a credit card. Not a student? Check out our Full credit cards section.
Related guides... How credit cards work | Improve your credit score
How do student credit cards work?
The easiest way is to think of it as a borrowing card, so a way to spend money that's been lent to you. Here's how it works:
- You'll be allowed to spend a certain amount. If you're accepted for a card, your provider will set a maximum amount you can spend, which is called your credit limit.
- You then pay for things using the card. Make sure not to exceed your credit limit, or you'll incur fees. If you're looking to build your credit score, aim to use no more than 30% of your limit as this helps show you're not reliant on borrowing.
- The credit card company sends you a bill for the amount you owe every month. Make sure to pay this on time or again you'll incur fees, and a negative mark on your credit file. Your best bet is to set up a direct debit so your credit card company will automatically collect the amount from your bank account.
- Repay the bill IN FULL each month, repay less and you'll pay costly interest. Your statement will show two key figures – the full amount and the minimum repayment, which is the lowest amount you must pay.
Pay the full amount by the due date and there's no cost. However, pay a lower amount and interest is added to your bill – based on the total amount you've borrowed.
For example, if you spent £200 and paid off £150, you'd owe £50 next month, plus interest on the full £200 you'd spent. Assuming an interest rate of 21.9% APR, that's roughly an extra £4, so your bill for next month would start at £54.
For more detail on how credit cards work, head to our full Credit card basics guide.
How do credit card providers decide who's eligible?
You'll need to pass a credit check to get a credit card. This lets the lender work out how 'risky' you are to lend to, and takes into account your income and other financial commitments. It can then either accept or decline you.
The criteria differs between lenders – you could be accepted by one but declined by another. So it’s better to use an eligibility checker to check your chances of acceptance before applying.
If you go on to apply, applications will leave a mark on your credit report, even if you’re declined, which could affect your ability to get credit in future (this is especially true if you make multiple applications in a short time period). Read our guide to how credit scoring works for full info.
How do I choose a student credit card?
- Credit (re)builder cards. These are likely to be the most relevant for students – they're aimed at those with a limited (or poor) credit history, which is typically the case for most students, who don't usually have a history of borrowing. These cards have less-strict acceptance criteria, meaning they're easier to get – though the trade off is that they often have low credit limits and high APRs. However, with careful management over time, you can improve your credit score and boost your eligibility chances for better cards.
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Reward cards. These cards offer rewards on your everyday spending, such as cashback, points or vouchers. However, don't use the rewards as an excuse to overspend – these cards often have high APRs, so it's crucial to pay them off IN FULL each month.
- 0% spending cards. These cards offers a number of months where no interest is charged on new purchases. So, if you have a big spending period coming up, you can spread the payment across the 0% period and avoid paying interest for that time. However, this isn't an excuse to overspend – you MUST repay the balance IN FULL before the 0% period ends, otherwise you'll pay expensive interest on a large balance, which is very costly.
There are many other types of credit cards, though they're unlikely to be relevant for students.
What to watch out for when choosing a student credit card
Here are some key things to look out for when choosing a credit card as a student:
- The interest rate (APR). This determines how much interest you'll be charged if there's an outstanding balance on the card at the end of each month. To avoid paying any interest, it's crucial to pay the balance off IN FULL each month. For most cards students can get, APRs will typically be around 30%, though it depends on the exact card you have.
- Credit card fees. Some credit cards come with monthly or annual fees – this is common for reward cards and is something it's important to consider before applying. Ask yourself, is the fee you're paying more than the sum of cashback and benefits? If yes, choose another card.
Always follow the GOLDEN RULES when using a credit card
If you get a credit card, it's crucial to use it correctly to avoid paying costly fees and/or interest.
- Clear in IN FULL each month or you'll pay hefty interest (as high as 60% APR).
- If you can't clear in full, ensure you never miss the minimum monthly repayment. Fail to do this and you'll get a £10ish late fee and a mark on your credit file.
- Never spend beyond your credit limit (or there's a £10ish fee).
- Never withdraw cash – repeated cash withdrawals on a credit card are a red flag to lenders, plus it's expensive as there's usually a 3% or £3ish charge and you're charged interest from day one, often at an even higher rate.
Advantages and disadvantages of getting a student credit card
Used right, a credit card comes with a number of benefits. However, get it wrong and you can be stung for years. Here are the main pros of getting a credit card, and how to avoid the cons.
Pros ✔️
- Build your credit rating. Managing a credit card well – staying within the credit limit and paying at least the minimum on time every month – helps to build your credit rating score as it shows you're a responsible person to lend to. This makes you more attractive to lenders, which can make taking out a mortgage (or other credit such as a loan) easier and means you will qualify for cheaper rates.
- Free protection on anything that costs over £100. When you pay for something that costs between £100 and £30,000 (so pay for just 1p on the card, and the rest of it in another way, and you're covered), your purchase will be protected by Section 75 of the consumer credit act. This means your credit card provider must take the same responsibility as the retailer if things go wrong, which is powerful if the retailer goes bust or won't play ball.
- A good back up for emergencies. If you're waiting for your student loan to come in, and you're hit with an unexpected cost such as replacing a laptop or repairing your car, a credit card enables you to pay to keep you going. You then have more time to budget to clear the card as soon as you can, avoiding more expensive options such as payday loans.
- Can offer cheap borrowing and rewards. As we've said above, repay IN FULL each month and there's no cost at all for using a credit card. There are also many different types of credit card, with some offering 0% interest for a set number of months (so the cheapest way to borrow over the longer term) and others that pay cashback or reward points to use them.
You may not have the income or credit rating to get these cards now – or the need – but use a credit card to build your credit rating now and you'll boost your chances when you graduate.
Cons (what to watch out for)⚠️
- Never withdraw cash on a credit card. Most cards charge interest on ATM withdrawals from day one, even if you repay in full, so it's expensive. Doing so also puts a mark on your credit report, which is usually seen as a red flag to other lenders that you can't manage your money well. So avoid it at all costs.
- Credit limits are usually low, so make sure you don't bust it. A low credit limit (typically £250 to £1,000) isn't necessarily a con, as it can help ensure you only spend amounts you can afford to repay (ideally IN FULL each month). However just be careful not to exceed this, as you'll be breaking the terms of your agreement, meaning you'll usually pay a fee and a negative mark is placed on your credit file.
- Beware just paying the minimum repayment. Credit cards can have very high interest rates, which makes it very expensive if you don't pay off in full each month. Opt to just pay the minimum and you could find yourself in debt for years. See the minimum repayment spiral for full help.
- Never miss a repayment. If you pay your credit card bill late or miss a repayment, not only will you be hit with interest, you'll have to pay a hefty fee and face the negative impact on your credit score. To ensure you don't miss it, set up a monthly direct debit to automatically pay off the minimum amount (or a higher/the full amount if you can). If you know you won't be able to pay, contact your provider immediately and work with it to agree a different repayment plan.
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Alternatives to student credit cards
If you're not sure a credit card is the right option for you – or you're not eligible for one that fulfils your needs (more on this below) – there are a couple of other options.
- A 0% overdraft on a student current account will be cheaper if you can't repay a card IN FULL. Many student accounts come with generous interest-free overdrafts, which will be cheaper than a credit card if you can't clear it at the end of each month. For example, if you needed to make a one-off large purchase in an emergency.
Banks typically compete for your business too, so some will often throw in some extras to encourage you to pick them. These range from railcards, to free cash – so if you're looking for perks, shop around until you find something you like. See our Student bank accounts guide for full help and our top-pick accounts.
- A credit card isn't the only way to boost your credit score, for example, registering to vote can help. There are some super easy ways to help increase your credit score (without or alongside a credit card). Find more easy ways to boost your credit score in our full Improve your credit score guide.
Am I eligible for a student credit card?
This can be tricky, as each credit card company will have a different set of eligibility criteria – and sadly there's no credit card that will guarantee to accept you.
However, you'll usually need to be aged 18 and live and study in the UK as a minimum. To improve your chances, already making regular payments for a financial product such as a phone contract can help, as can having some form of income.
While you don't need to have a full-time job to qualify for a student credit card, you'll usually need to have some form of income (other than your student loan), which could be money from your parents, or salary from part-time or casual work. Student loans tend not to count as 'income' as they are a form of debt.
Use our Credit Card Eligibility Calculator to compare cards
To help, our free eligibility calculator shows your acceptance chances for many top cards before you apply. You just need to fill in one form to see which lenders will and which won't offer you a card.
What's the best student credit card?
As a student credit card is just one that accepts students, using our eligibility checker will allow you to compare cards in your personal best-buy table. That link takes you to the 'credit building' category, which shows cards that are more likely to accept those with low incomes and minimal credit history.
However, our tool sadly doesn't have every card in the market and certain cards are only available if you already have a student current account with them. This is usually because, in lieu of a credit history, the way you use your current account can give the bank a better insight into how you use your money.
Both HSBC (18.9% rep APR) and TSB (21.9% rep APR) do this, so if you're happy banking with them, they could be worth considering.
See our guide to getting your first credit card for more help.
Student credit card FAQs
More credit card top tips
We've a whole host of credit card top tips and tricks to help you get started. Below is a quick round-up of where we'd suggest you head next.
Suggestions for you
- Check which cards you might be accepted for using our credit card eligibility calculator.
- Just looking to make a one-off purchase? See whether a loan could be a better option.
- Read up on the basics of applying for and using your card with our How credit cards work guide.
- See the many other ways you can boost your credit score using our Improve your credit score guide.
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