Student credit cards can be a useful financial aid that helps you manage your expenses and free up cash flow when you’re studying. When used properly, they can also lay the foundation for your financial future, giving you a great start in terms of credit accountability. This guide looks at how a student credit card works, the advantages and limitations of using a student credit card and how to best compare cards so that you can choose a suitable card for you.
Student credit cards work quite similarly to a normal credit card, except that the monthly credit limit is at S$500. This is to protect the bank from a possible default risk, since students are assumed to not be drawing a monthly income. The minimum age limit for student credit cards is also lowered to 18 years old instead of the usual 21 years old. You will most likely need to prove that you are a tertiary student in order to qualify for a student card.
Using a student credit card can give you great convenience in situations where you may not have available cash to pay for something immediately, such as costly study materials or fees for school activities. Some of these cards offer great perks to students as well, such as dining discounts and free or discounted entries to entertainment centres. You may even be able to accumulate reward points and cashback, much like a regular credit card.
How much will a student credit card cost?
The cost of a student credit card varies depending on the specific features of individual cards. The main features to consider are:
Annual fees. The annual fees for student credit cards are usually kept low at less than S$50 per annum; some banks offer a fee waiver as well.
Cash advance fees and charges. Most banks do not make a difference between the cash advance fees chargeable on a student or normal credit card. If you use your credit card for a cash advance transaction, you will be charged a fee of on the amount withdrawn, at a minimum charge of around S$15. Interest rate charges for cash advance is usually around the prevailing interest rate of 25% to 28% on the amount withdrawn. Do note that the interest charges are subject to compounding and is chargeable on a daily basis. The high cost of using cash advance is why you should only use its function in times of emergency.
Foreign transaction fees. Using your credit card overseas or to make a purchase online with a foreign retailer will incur foreign transaction fees. This fee is 3-fold:
Foreign exchange rate – this is a charge for conversion of currencies imposed by the respective card associations(Visa, MasterCard/Amex)
Currency conversion charge – usually around 1%
Bank’s administrative fee – 1.8 to 2.5%
Other fees. Other fees that may apply when you have a student credit card include late payment fees and overlimit fees. To ensure that you keep a good credit score and avoid the building up of credit card debts, remember to pay off your monthly bills promptly and in full every month.
Features of student credit cards
Student credit cards come with a variety of features that vary depending on the specific card you choose. Consider some of the following details to help you decide on a suitable card:
Low credit limits. Student credit cards in Singapore come with a low credit limits of S$500 since you do not need an income requirement to qualify for these cards. However, if you are a part-time student and is drawing a minimum annual income of S$30,000 you can ask for a credit limit review.
Rewards and Rebates. Even if the credit card you hold is a student credit card, you get to earn reward points and cash rebates as well, much like a regular credit card.
Student discounts. Most of these student credit cards come with perks and discounts on dining and entertainment outlets targeted at students. These include common coffee joints, free or discounted entries to clubs and discounts on movies.
Will a student credit card suit your needs?
Student credit cards offer a lot of flexibility when it comes to helping you manage your cashflow but they may not be suitable for everyone. The following key questions can help you decide if getting a student credit card will suit your needs.
Why would you want a credit card? Is it to help you with upfront payments or to have access to funds while travelling? Thinking about your reasons for wanting a credit card can help you determine if you really need one and make it easier to compare different options.
Are you planning to apply for other unsecured credit facilities in the future? Lenders consider your credit history when you apply for any form of credit, including cards, personal loans, car loans and mortgages. Getting a credit card and making sure you pay your bills promptly can help you build up a good credit history so that it is easier to get an approval for other financial products in the future.
Will you be able to pay off the credit card bills in full every month? Paying off your card in full helps you avoid interest charges and reduces the risk of debt. If you think there is a chance where you may not be able to pay off the debt in full, you may want to reconsider taking up a card since rolling over your monthly bills can trap you in a debt cycle.
Do you have alternative options? Depending on your needs, there may be other financial products or plans that are more affordable than a credit card while you’re studying. For example, if you want to have access to funds within a short period of time, you could consider opening a savings account and putting some of your own money aside for unexpected emergencies that may arise. This is a more cost-effective way as there is zero interest charges withdrawing from a savings account, as compared to the potential interest charges that can come from using a credit card .
If you have a regular income or savings and can manage your expenses well, a student credit card could be a useful tool to help with cashflow management between paydays. But if you struggle to manage your money or find that there is a probability that you will use the credit card even when you can’t afford, then it may be better to keep the temptation away by not applying for one at all.
Tips for using a student credit card
Whether or not you’ve had a credit card before, these simple tips will ensure you know what to do and what not to do when you get your student credit card:
Only use your credit card for essential items. Spending only on items you need helps to rein in impulse spending, which can be a cause for credit card debts. If you want to buy something you want that you don’t need immediately, consider saving up for it instead. Keeping your credit card at home and only bringing it out on intended spending is also a good way to curb the temptations.
Using cash for daily spending. Some people may forget that you still have a bill to pay at the end of the month when you use a credit card and may receive a “bill-shock”. To prevent this from happening, use cash or a debit card for your day-today spend so that it do not run the risk of incurring any interest or late-payment charges.
Set up a monthly and weekly budget. A weekly budget helps you to stay on track so that if you spend more in one week, you can adjust your spending for the next week to match your monthly budget.
Shorten your card payment cycle… While credit card statements usually come once a month, you can make it a habit to pay it off after every transaction or every once a week. This strategy can reduce the amount of interest you will potentially pay and can help you stay on track on your bill payments.
Try to save a portion of your income in an emergency account. Ideally, you should aim to put away 10% of your income. If that’s too difficult as a student, aim to save at least 5% of your pay so that you have some money set aside if something unexpected comes up. This money will help keep your costs down in an emergency, even if you have to use a credit card to pay the difference.
Budget in money for entertainment and fun. Credit cards can make it too easy to spend money that you don’t actually have, especially when you are out having a good time with friends. By budgeting for luxuries or a bit of fun, it can help you to keep your credit card balance in check.
How to compare student credit cards
If you decide to get a credit card as a student, it’s important to make sure you find an option that’s right for you. Comparing student credit cards allows you to see features of different products side-by-side so that you can find one that will suit your individual circumstances and needs. We’ve outlined the main factors you’ll need to consider for a student credit card comparison below.
Consider your individual circumstances. This includes your study commitments, your income from work, Centrelink or other benefits and your ongoing expenses. You should also consider your current money habits to decide whether or not you will be able to effectively manage a credit card.
Look at the features of the card(s). Pay particular attention to the standard interest rates and fees, as well as the requirements to meet any student discounts or waivers offered by the card. This step will help you find a credit card that offers the most convenience and affordability for you.
Choose the card that suits your circumstances. By looking at the features of a number of cards and considering your circumstances, you will be able to find a student credit card that is convenient and affordable for you.
Melvin applies for his first student credit card
Melvin is a student in the Engineering faculty at the National University of Singapore and has a part-time job teaching private tuition once a week. He is just about to start his second semester and is considering getting a credit card to help pay for all his textbooks and other study materials at the start of the semester. This would allow him to pay off the purchases over time, leaving him with enough cash to cover his stay in the school hostel and other everyday expenses. He also plans to pay it off in full each month, so he wants to look for an option that has a competitive interest-free period. Melvin narrows his choices down to the Bank A Easy Living Credit Card and the Bank B Student Plan Credit Card. He considers the following features:
Standard purchase rate
Bank A Easy Living Credit Card
Free. There is a quarterly service fee of S$5 but will be waived with at least 1 transaction every 3 months.
Bank B Student Plan Credit Card
S$127.40 p.a. (waived for the first 5 years)
Financial institutions, credit cards, rates and fees used are for example purposes only.
Based on these details, Melvin decides to apply for the Bank A Easy Living Credit Card since it offers a perpetual S$0 annual fee and allows him to earn a 1% rebate on all his expenditure, which can help him to further save more money. The lower interest rate is also an attractive factor in situations where he might be late for his monthly bill payment.
How to apply for a student credit card
Eligibility requirements checklist
Age. You need to be at least 18 years old in order to apply for a student credit card. You will need a copy of your parent’s/guardian’s NRIC if you are below 21 years old.
Student Matriculation card. Depending on the bank, you will need to prove that you are a current student at one of the approved tertiary institutions.
Residency Status. Some cards are only open to application from Singaporeans citizens and PRs, while others are open to foreigners.
Income. There is no minimum income required for student cards since the assumption is that most students are studying in a full time basis. However, for those who are studying part-time or earning a side income, the minimum income requirement is S$18,000 annually and not exceeding S$30,000.
Credit history. For most applicants, a student credit card is their first credit product, meaning they do not have existing credit history. Credit limits for most student cards are low to minimise the bank’s risk of default and give students a pathway to build their history. As long as there are no blemishes on any existing credit reports, your application should be approved if you meet all of the other eligibility requirements.
The documents and information you’ll need to provide
If you meet these application criteria, you can go ahead to fill out the online form. You’ll need to provide some personal details, including:
Personal information. This includes your full name, NRIC number, date of birth, residential address, email address and phone number. Student information. You’ll need to include details of the educational institution you’re enrolled in.
Legal Guardian’s Details. For those who are below 21 years old, you will need to fill in your legal guardian’s or parent’s details, including their name, NRIC/Passport number, relationship to you, contact number and their employer details.
What happens after I’ve applied?
Once you have filled out the online application, you will arrive at the last page where you can review all the information you have filled in before you hit “submit”. You should reach a screen that informs you that your form has been submitted. The processing for card approval can take anywhere within a week to 2 weeks.
Once it is approved, you will receive the card in your mailbox and you’ll need to activate it before you can start using it.
Frequently asked questions about applying for student credit cards and using them
Yes, most student credit cards available in Singapore offers some form or rewards or cash rebates, much like a regular credit card. You can then use the reward points to redeem for a variety of shopping, dining or entertainment treats.
There are some card issuers who only allow Singaporeans and Permanent Residents to apply for a student credit card here whereas certain banks are open to applications for foreigners. You should check with the individual banks for their eligibility criteria.
It is important to be prompt in making your monthly bill payments since the finance charges and interest payments can quickly accumulate. Interest charges on the balance are at a prevailing rate or between 24 to 28%; you may also be charged a late payment fee if the minimum payment is not received by the due date. Most credit cards here require a minimum balance payment of S$50 or 3% of the statement balance, whichever is greater. Late payment charges may be anywhere between S$50 to S$100. Due to the high charges for late payment , you should always aim to pay at least the minimum amount off your card by the due date on your statement and contact your issuer to discuss your circumstances if you’re struggling to meet these payments.
If you don’t continue to make payments on your Singapore credit card, the consequences could include any of the following.
Your Singapore credit card issuer may continue to charge additional fees and interest on your account, increasing the total amount of your debt.
Your Singapore credit report may show that you have defaulted on a debt. This may make it harder for you to obtain credit if you return to Singapore in the future.
Your credit card debt may be passed on to debt collectors. While most debt collectors in Singapore operate domestically, there are some international debt collectors that could try to recover the debt even when you live overseas.
The bank may take legal action, which could include suing you for the amount owed or having you declared bankrupt.
The bank could go to your legal guardian or parent to try to recover the debt since most student credit cards here require their consent before approval of the card.
The majority of applications for student credit cards do not give instant approval since you do not need to furnish any income details. This is for the protection of the bank since they will have to go through adequate credit checks to lower the risk of potential defaults.
There are a number of ways for you to pay the balance conveniently. These include:
Sally McMullen is Finder's credit cards and frequent flyer editor by day and a music maven by night. She's also one half of the Pocket Money podcast. Her byline can be spotted on Yahoo Finance, Dynamic Business, Financy and Mamamia as well as Music Feeds and Rolling Stone. Sally has a first-class Honours degree in Communications and Media Studies (majoring in Journalism and Professional Writing) from the University of Wollongong.
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