If you’ve completed your studies at university, you’ll no doubt have a lot of debt to repay and you might be looking for a job to help you do so. You might also be looking for a credit card to help you cover the costs of certain expenses.
Used in the right way, a credit card can be hugely beneficial and can help you build up your credit score. But it’s also important to understand how credit cards work and make sure you don’t end up racking up a lot of debt you can’t afford to pay back.
Yes, it’s certainly possible to get a credit card once you’ve graduated. However, this will be dependent on your personal and financial circumstances.
If you have a regular income – for example, if you have a job – and your outgoings are not particularly high, you will likely find it easier to get accepted for a credit card compared to someone with no income and high outgoings.
Before applying for a credit card, it’s important to consider how much you can realistically afford to spend on your card and how well you can manage your repayments.
Although credit cards can be useful tools for helping you to better manage your finances, you can easily get caught out if you’re not careful. Interest charges can be high if you don’t pay off your balance in full each month, and it can be easy to build up a lot of debt if you can’t afford to keep up with your repayments.
It’s also best not to use a credit card to withdraw cash from an ATM unless it’s an emergency. If you do, you will be charged a fee of around 3% and interest will also be charged from the moment you get your money, even if you pay off your balance in full that month.
When comparing your options, always consider how much interest you would have to pay if you were unable to pay off your balance in full each month as well as the fees you might be charged. Bear in mind that if you miss any repayments, you’ll be charged a late payment fee of around £12 and the missed payments will be noted on your credit file. This can have a negative impact on your credit score and affect your ability to get accepted for credit again in the future.
There are several different types of credit cards to consider when you’ve graduated. If you had a student credit card while you were studying, you might be able to hold onto it, but you could benefit from a better deal if you apply for a brand new card.
The advantage of having used a student credit card is that you will have started to build up a credit history. Provided you used your card responsibly – in other words, you kept within your credit limit and made your repayments on time – you will be in a better position to borrow than someone who has no credit history at all. That’s because lenders will be able to see that you’re a reliable borrower and may be more willing to let you borrow again.
If that’s the case, you might be able to take advantage of one of the following:
On the other hand, if you didn’t use a student credit card at university and you have little to no credit history, getting accepted for one of the above cards is likely to be trickier.
If that’s the case, it could be worth applying for a credit builder credit card, which is designed to help you improve your credit score over time. These cards typically have low credit limits and high interest rates, so it’s important to pay off your balance in full each month. As your credit score improves, you may be able to apply for a more competitive credit card.
This will depend on your individual circumstances and what you wish to use the card for. If you have very little credit history or a poor credit score, a credit builder credit card such as Aqua’s Classic Card could be the right choice. Before applying we highly recommend using our eligibility checker tool to see what other cards you could get accepted for.
But if your credit score is good and you want to spread the cost of your spending, a purchase credit card is worth considering. Alternatively, if you want to transfer existing card debt, consider a balance transfer card, while if you want to earn something back as you spend, look at rewards credit cards.
The main challenges for recent graduates looking for a credit card are that they often don’t have much of a credit history, their income can be low and they often have a large amount of debt to repay in the form of a student loan.
All of these factors can make lenders more reluctant to let you borrow. Lenders won’t know how well you can handle credit and they may also be concerned about your ability to be able to afford your repayments. If you are accepted for a credit card, you may find you’re offered a lower credit limit and a higher interest rate. However, if you borrow responsibly and make your repayments on time, your credit score should start to improve, giving you access to more competitive deals.
If you had a student bank account while you were studying, most banks will let you switch to a graduate account once you’ve graduated. Some graduate accounts come with an interest-free overdraft designed to help you pay off some of your student debt – but not your student loan. Interest-free overdrafts can last for up to 3 years but your overdraft limit may decrease each year. It’s important to try and pay off your overdraft before the interest-free period ends.
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