Best credit cards for students

What is a student credit card?

Student credit cards work in the same way as standard credit cards but you need to be enrolled in part-time or full-time study. To apply for a card you will need to provide your student number and proof of enrolment.

Student credit cards tend to have low credit limits and no annual fees, to help make them more affordable. Typically they have basic features that are designed to help you learn how to manage money without incurring massive costs.

Typically, they also require you to have a student bank account with the lender offering the card. For example, to be eligible for a TSB Student credit card, you’d need to be an existing account holder with TSB. That being said, there are some cards, like the Ocean credit card, that consider applications from students – albeit you meet the eligbility criteria.

Is a student credit card a good idea?

Student credit cards can help you manage your expenses and free up cash flow when you’re studying. They can also lay the foundation for future lending options such as car loans or mortgages or rewards credit cards. This guide looks at exactly how a student credit card works, the pros and cons and how to find the best card for you.

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. Most student credit cards come with a low annual fee or no annual fee. If you’re considering a credit card with an annual fee, factor the cost of the fee into your budget and check the terms and conditions for any annual fee waivers that are available for students.
• Purchase rate. This is the standard variable interest rate that’s applied to new purchases made on the card. Student credit card purchase rates range around 22% p.a, and are often higher. Interest rates on student cards are typically higher than regular credit cards as they’re designed to help you learn about the lending process and build up a credit record. The higher your purchase rate, the more interest you will have to pay if you carry a balance on your card.
• Cash advance rate. This is the standard variable interest rate that’s applied to cash advance transactions such as cashpoint withdrawals, payment for foreign currency and even some bill payments. The cash advance rate is typically the highest interest rate on a credit card and is applied immediately from the time a cash advance transaction is made.
• Cash advance fee. If you use your credit card for a cash advance transaction, you may also be charged a fee of around 2% to 3% of the total transaction cost. For example, if you used your credit card to withdraw £500 from an ATM, the cash advance fee would be £10-£15. The high cost of cash advances means they should be avoided as much as possible.
• Foreign transaction fees. Most credit cards charge a fee when you use them to make purchases overseas or with an international retailer online. This fee is usually between 2% and 3.5% of the total transaction. You can avoid this cost by considering credit cards with no foreign transaction fees or other options such as travel money cards.
• Other fees. Other fees that may apply include late payment fees and charges for going over your credit limit. Always check the credit card’s product disclosure statement for full details so that you can factor in all the costs before you apply for a card.

Features of student credit cards

Student credit cards come with a wide range of other features that vary depending on the specific card you choose. Some of the key details to consider include:

• Interest-free days. If you regularly pay off your balance in full by the due date on your statements, you will usually have an interest-free period for each statement cycle, generally around 55 days. The interest-free days generally start at the beginning of your statement period.
• Low credit limits. Student credit cards usually have a limit of around £500. The credit limit you get depends on the card, the lender and your individual circumstances. A lower credit limit is generally easier to pay off from month to month and reduces the risk of serious debt.
• Complimentary extras. Some student credit cards will come with additional benefits, such as complimentary purchase protection insurance and extended warranties for eligible items you buy with your card.
• Other features. Student credit cards could come with a range of other features, including mobile payments, low or 0% interest rate introductory offers and Mastercard or Visa benefits, plus promotional extras such as vouchers or tickets. Keep an eye out for these features when you’re comparing cards to find one that offers the best value.

Will a student credit card suit your needs?

Student credit cards offer a lot of flexibility when it comes to cash flow but they’re not right for everyone. Consider the following key questions before applying to decide if this option will suit your circumstances.

1. Why do you want a credit card? Is it to manage your expenses between paydays, to have access to funds while travelling or to build up your credit? Thinking about your reasons for wanting a credit card will help you figure out if it’s right for you and also make it easier to compare different options.
2. Are you planning on applying for other loans 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 using it responsibly can help you build up a good credit history so that it is easier to get approved for other financial products in the future.
3. Will you be able to pay off the card in full every month? Paying off your card in full helps you avoid interest charges and reduces the risk of debt. Looking at your current income and budget, then considering how credit card payments would fit in, will help you figure out if a card is the right option for you at this stage of your life.
4. Are there other options you should consider? 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 funds in an emergency, you could consider opening a savings account and putting some of your own money aside for unexpected outlays that may arise. This could help keep costs down as you’ll avoid the potential interest charges and debt that can come from using a credit card if you can’t afford to pay it off in full.

If you can manage your expenses well, a student credit card could be a useful tool to help build a positive credit report or help with cash flow when you’re waiting for your student loan, or part-time job paycheck to clear. But if you struggle to manage your money or find that you can’t afford everything you want, then it may be better to stick to using your own money. Make sure you have a student bank account, or have upgraded an existing bank account to a student one, to take advantage of the financial benefits and support that they offer.

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 items that are essential. This strategy usually stops impulse spending, which will run up a credit card in no time. If you want to buy something but don’t need it straight away, consider saving up for it instead. Keeping your credit card at home and saving it for emergencies is a good way to curb the temptation to spend.
• Try to pay cash for your everyday spending. Remember that credit card spending has to be paid back and could lead to interest charges and other fees if you carry a balance. For everyday spending, you may want to consider using a student debit card, which allows you to use your own money and doesn’t lead to interest charges.
• Follow a monthly and weekly budget. That way if you spend more in one week, you can adjust your spending for the next week so that it is affordable based on all your financial commitments, including credit card payments. Get started with our free budget planner.
• Pay as you go. While credit card statements usually come once a month, you can choose to pay off the balance more regularly. As well as ensuring that you always meet the minimum repayment, this strategy can reduce the amount of interest you pay and may even help improve your credit score.
• 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.
• Make sure you have some money budgeted for fun. Credit cards can make it tempting to spend money that you don’t actually have. By budgeting for luxuries or a bit of fun, you’ll be in a better position to keep your spending and your credit card balance in check.
• Ask for split payment options. Many businesses allow you to split payments between different cards, or even allow you to use a combination of cash and cards. This type of payment can be a useful way to keep your credit card balance down while also allowing you to keep some of your own money available for other spending.

How to compare student credit cards

If you decide to get a credit card, it’s important to make sure you find an option that’s right for you. Comparing credit cards allows you to see features of different products side-by-side so that you can find one that will suit your needs. We’ve outlined the main factors you’ll need to consider below.

1. Consider your individual circumstances. This includes your study commitments, your income from work, student loans and 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.
2. 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.
3. 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.
4. Don’t just go for the card your bank offers you. Most student bank accounts will come with the option of a credit card. If your existing bank offers one as part of their student banking package, you don’t have to take it. Consider its features and interest rates and be sure to compare it with other cards on the market before committing to it. If it won’t work for you, shop around.

Credit building cards

Since there isn’t a great number of student cards on the market and if you’re not already with AIB, TSB or HSBC, you won’t be able to get a student credit card in the UK. A great alternative to student credit cards are credit builder cards.

These cards are designed for people with no or poor credit history. Credit builder credit cards typically also have a more lenient eligibility criteria, making them easier to get accepted for compared to ‘normal’ credit cards. However, because of this, these cards often have lower credit limits and higher interest rates.

Compare credit builder cards

How to apply for a student credit card

After comparing student credit cards to find the right option for you, the next step is to apply. You can do this online in about 20 minutes via the lender’s secure application page. Before filling out your information, make sure you meet the credit card application requirements. These can vary, but generally include:

Eligibility requirements checklist

• Age. You need to be over 18 years of age in order to apply for a student credit card.
• Residency status. You’ll need to be a UK resident to apply for a credit card in the UK.
• Student status. You must be enrolled in an accredited school or university.
• Savings or everyday bank account. In some cases, you may be required to have an everyday bank account or savings account with the same bank that issues the credit card. Banks offering specialist student credit cards might want you to have your student account with them, as well.
• Credit history. For most applicants, this 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 fill out the online form. You’ll need to provide a range of details, including:

• Personal information. This includes your full name, date of birth, residential address, email address and phone number. You’ll also need to provide a valid form of identification, such as your driver’s licence number or passport number.
• Student information. You’ll need to include details of the institution and course you’re enrolled in.
• Employment information. If you work outside of study, you’ll need to provide details of your employer and income, such as contact details and recent payslips.
• Other financial information. You may be asked to include details of any assets and debts that you have, including savings accounts or other credit card debt. You may also be asked to estimate your ongoing financial commitments, such as rent, bills and grocery costs. This helps the issuer determine whether or not you can afford to manage a credit card.

What happens after I’ve applied?

Once you have filled out the online application, review all the details and hit “submit”. You should get a response within a few minutes. The credit card company will also be in touch if they need further information in order to complete the application process. If you’re approved, you should get your new card within a couple of weeks.

You’ll need to activate it and then you can start using it. From textbooks and stationery to tuition fees and everyday expenses, there’s a whole range of costs that are specific to students. Now that you know more about student credit cards, you can compare your options and decide on the right types of accounts to suit your needs while you’re studying.

Under 18? Find out what your credit card options are

Frequently asked questions

• Can I get a student credit card that offers rewards?

  Many (but not all) student credit cards are designed as low-cost options and don’t come with a rewards programme. If you’re interested in earning rewards for your spending, you may want to compare student credit cards and rewards credit cards to see which type of product suits your needs. You may also want to consider a rewards debit card.

• What is the best student credit card for travelling?

  The best travel credit cards tend to have no or low foreign transaction fees. Some credit cards also charge an additional or higher fee if you take cash out at an ATM, so if you’re a student about to go jet-setting around the world, make sure you check your card’s terms on overseas usage.

• I am an international student. Can I get a credit card in UK?

  No, UK banks require you to be a UK resident to have a UK-based credit card.

• What happens if I miss a payment on my student credit card?

  Not making payments on your student credit card will cause your debt to increase very quickly. Interest will be charged on the balance and you may also be charged a late payment fee of up to £12. If you continue to carry a balance on the card, you will be charged interest on the entire balance (including the late payment fee and interest charges). It could also negatively affect your credit report. Always aim to pay at least the minimum 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.

• What credit cards give instant approval?

  The majority of applications will give a result instantly, telling you if you’ve been approved, not approved, or in some cases, that your application is pending.

• What if I am a student with bad credit?

  It’s unusual for students in the UK to have a poor credit history, since the majority have not yet had the opportunity to use many credit products and subsequently build up their credit report. However, student credit cards generally offer low credit limits, high interest rates and very basic features, which make them more suitable for people with poor credit. You might also consider credit-building cards, or credit cards designed for people with a bad credit rating.

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