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Smart Money

Applying for a Student Credit Card

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Pauline Hatch      

While you may have dreaded those first days back to school as a kid, going back to uni feels different. Sure, you still need to get your brain in gear as you adapt from summer-dreaming into study-mode, but you have a little more say in how you do that as a uni student compared to how it was in high school.

For one thing, you may not be living at home any more. Yay independence! But, while you may be welcoming that freedom, you now have a lot more on your shoulders as you deal with day-to-day life on your own. No more rides in Dad’s taxi. No more free meals from Mum’s kitchen. You have to do your own laundry, your own cleaning, your own everything, basically.

So, what about money? If you’re lucky, you’ll have HECS-HELP to cover your fees, and perhaps a little on the side from the Bank of Mum-and-Dad. You may have worked over summer to build up some reserves to live on through the year, or maybe you plan on having a casual job during term time to keep some cash coming in. But, is that enough?

For some uni students, a credit card can make money management a little bit easier to deal with. However, let’s get this clear from the start: a student credit card is not the answer to your money worries. It won’t give you free money, and it shouldn’t be used to pay for stuff you can’t afford to pay back. Instead, it should be used as a tool to help you manage your money more effectively.

So, what else do you need to know about student credit cards?

How do student credit cards work?

A student credit card is basically a credit card that has been designed to suit the needs of students. Typically offering a lower minimum credit limit than standard credit cards, student credit cards allow cardholders to access credit, encouraging them to learn to use their card responsibly, while keeping the risk fairly low.


Basic in nature, student credit cards tend to focus on keeping costs down, usually with a low annual fee or low interest rate. Without all the extras typically offered on other credit cards, this can make it easier for cardholders to focus on learning how to deal with credit, spending what they can afford, and then paying it back before interest starts accruing.

In terms of eligibility, student credit cards are usually easier to get approved for than standard credit cards. Because they are aimed at students, they have lower eligibility requirements, with a lower minimum income required. However, some student credit cards may have stipulations regarding the type of education the cardholder is enrolled in, for example, full time education in an approved university or TAFE.

Student Credit Cards 101

  • Use your card to pay for stuff online or in person.
  • You can spend up to your approved credit limit (but you should only do this if you can afford to pay it all back).
  • Keep an eye on your balance using online banking or the card provider’s app.
  • Your card provider will send you a statement at the end of the month giving you your balance, and how much you need to repay as a minimum repayment.
  • Pay off your balance by the statement due date to avoid fees and interest.
  • If you pay a smaller amount, the remaining balance will start accruing interest at your card’s standard purchase rate. You will no longer benefit from interest free days on new purchases.
  • You can choose to pay money towards your balance at any time (you don’t need to wait until your statement is due).


What do student credit cards offer?

What can a student credit card offer you? Let’s take a look.

Buy now, pay later

Surely one of the main attractions of having a credit card is the fact that it allows you to buy stuff now and pay it back later. As a student, your money may be stretched pretty thin, so being able to buy the things you need now and pay them back later when you have money available can be invaluable.

Easier approval requirements

When you apply for a credit card, you must meet the card provider’s requirements for approval. This may mean earning over a certain amount each year, or having excellent credit. As a student, you may not have a regular income, and you may not have had much of a chance to build your credit, making it harder to get approved. However, card providers offering student credit cards take those factors into account, and tend to be more lenient with regards to income and credit history.

Low credit limit

When card providers approve a card for a low income earner or a low risk applicant (someone with no credit history, for example), they will minimise the risk of lending to those cardholders by giving them a low credit limit. As a student credit cardholder, you will typically have a lower credit limit to start with, reducing your potential for getting into trouble if you happen to overspend. If you treat your card responsibly, your credit limit may increase over time.

Low fee

Students aren’t known for being rich. Which is why student credit cards tend to be low cost. When searching for a student credit card, be sure to choose one with a low annual fee, as this will help to keep your costs down over the long term. You may find some student credit cards charge no annual fee, while others waive the annual fee for students who meet their eligibility criteria.

Low interest

While not all student credit cards offer this, another feature to look for is low interest. As you’re getting used to dealing with credit, it’s fair to say you may overspend now and again. If that happens and you aren’t able to pay off your balance, you will want a card that charges the lowest possible interest rate. This should help you save money as you work on paying down your balance faster, reducing your chances of falling into debt you can’t get out of.

Interest free days

Talking of interest, you may be able to benefit from interest free days on your credit card if you use it correctly. Most credit cards offer a certain number of interest free days to cardholders who pay off their balance each month by the due date. As long as you do this, you can use your card to pay for stuff now, to then pay no interest on your purchases until your next bill is due.


As you compare student credit cards, you’ll probably notice a distinct lack of exhilarating features. Sad to say, those are only offered on higher end cards – which have much higher annual fees and higher minimum income requirements. However, you can expect some extras on your student credit card, such as contactless payments, Visa and Mastercard benefits, complimentary insurances, and security basics.

Introductory offers

While these cards tend to keep it simple in terms of extras, you may find an introductory offer or two as you compare the options. Keep an eye out for cards with a reduced annual fee or a 0% interest offer on purchases. A 0% balance transfer offer could be helpful if you have a balance on an existing credit card that you want to pay down.

Student Credit Card Glossary

Annual Fee: This is the fee you will pay the card provider each year to keep the card in your wallet.
Purchase Rate: This is the rate of interest you will pay on purchases made using your card if you don’t clear your balance by the due date each month.
Cash Advance Rate: The is the rate of interest you will pay on cash payments, such as ATM withdrawals (typically starting from the day the transaction is made).
Balance: This is the amount owing on your card.
Credit Limit: This is the total amount you can spend on your card.
Minimum Repayment: This is the minimum amount you must repay on your card to avoid late fees.
Interest Free Days: This is the maximum number of days you will pay no interest on your purchases, as long as you meet the card’s conditions (for example, clearing your balance by the due date the previous month).
Minimum Income Requirement: This is the amount of money you need to earn to be eligible for the card.


When is a student credit card not a student credit card?

We’ve been talking a lot about student credit cards, but something you may not know is that these are cards offered to those who fit the student category (low income, low credit history).

Pros and Cons of Student Credit Cards

Applying for a credit card at any time of life is a big decision. Is this the right time for you to apply for a student credit card? Let’s weigh up the pros and cons.


Money when you need it

If your finances are stretched a bit thin, but you know money will be coming in soon, a credit card can tide you over to allow you to buy the things you need in the meantime.

Access credit at a low cost

By choosing a student credit card with a low annual fee and low interest rate, you can enjoy the benefits of having a credit card, while keeping your ongoing costs down.

Keep it simple, stupid

Due to their low cost status, student credit cards tend to keep extras streamlined. However, this can be a good thing when you’re still learning the ropes. You won’t be tempted to spend in order to earn rewards, and there are no fancy extras to take your focus away from what’s important (learning how to be responsible with credit).

It’s a starter card

Sure, there’s not much going on in the way of features, but if you use the card correctly, you can start moving up the ladder to eventually be eligible for higher end cards with more enticing features.

It’s lower risk

With your low-risk credit card, you will likely have a low minimum credit limit. This reduces the risk of you overspending and getting into trouble.

Build your credit history

As you get older, you’ll realise just how important having good credit can be. Being smart with your student credit card now could help you build your credit over time so that when you are ready to apply for other forms of credit, providers will see you as a more appealing prospective borrower.

Learn good money habits

Being good with money is a learnt skill. You need to work at it to become good at it. Your student credit card should teach you to budget, only spending what you can afford to pay back – and to always pay your bills on time.

Travel overseas with ease

When travelling overseas, you can make use of the Visa-Mastercard network to pay for stuff even in the most obscure of destinations. Credit cards are also often required as a form of security when staying in hotels, and can make it easier when paying for larger purchases such as flights.


Temptation to spend

If you’re new to credit, suddenly having your own credit card could make you go a bit wild with your spending. You’ll need to be careful to avoid overspending on your card if you want to avoid getting into debt.

Black marks on your credit file

If you’re reckless with your credit card, spending more than you can afford and missing repayments, it could negatively affect your credit. This could make it hard to get approved for credit later in life.

Your Credit Card, Your Credit

When you have a credit card in your wallet, you really only think about how it can help you in the moment. Need to buy a textbook for a class tomorrow but your pay won’t drop into your account until next week? Your credit card is there to help.

Behind all that day-to-day usage though, your credit card can help you in a much bigger way.

When you use your credit card week by week, when you pay off your balance, and don’t go over your credit limit, you are working on building your credit. This is something your older, non-student self will thank you for.

Why? Whenever you apply for credit, your credit history is assessed. Whether you’re signing up for a mobile phone plan, applying for a car loan, or submitting a rental lease, the provider will check your credit to see what kind of borrower you are.

If you have dealt with credit responsibly in the past, that suggests you will deal with it well in the future. As a low risk borrower, your application is more likely to be approved. You may also pay less in interest.

However, if you have no credit or bad credit, getting approved will become much harder. This is why having a student credit card – and using it wisely – can help set you up in later life.


How much do student credit cards cost?

One thing you will learn in life is that there is no such thing as a free lunch – which basically means nothing comes for free. While there may be plenty of benefits to having a student credit card, you need to understand the costs that come as part of the package.

Fees: Look at how much you will pay in annual fees. Typically cards with higher annual fees offer more features, but if your goal is to keep costs down, choosing a card with a low or no annual fee would be your best bet. Also look for other important fees such as those charged on cash advances, transactions made in a foreign currency, late payments and going over the limit.

Interest: You will pay interest on your purchases if you don’t clear your balance each month. The higher your card’s purchase rate, the more you will pay in interest. If you use your card to withdraw money (this is not recommended), you will pay the card’s (typically very high) cash advance rate from the day you make the withdrawal.

When shouldn’t you use a student credit card?

Credit cards aren’t for everyone. This is as true for those who are students as it is for full-time earners. So, when should you avoid using a credit card and look instead for an alternative option?

If you’re already in debt

If you’re struggling with debt, adding another credit card to your load is unlikely to help your situation. Using a balance transfer offer could help in certain circumstances, but you will need to be extremely careful about managing your situation if you choose this option.

If you tend to overspend

Regularly overspending on a credit card can lead to a heap of trouble. Not only will you have to repay all your spending, you will also pay interest on top. If you are unable to do that, your debt could spiral out of control.

If you can’t afford to keep a card

While student credit cards tend to have low annual fees, there are other costs to consider. You may pay out in other fees, such as foreign currency fees – and if you don’t pay off your balance each month, you will pay out in interest as well.

If you think you’ll spend just because you can

Having credit at your fingertips can be a heady sensation. For some people, that leads them to spend, just for the sake of it. They know they don’t have the money to pay it back, but their credit limit allows them to spend, so they do.

If you’re not eligible

Obviously, you shouldn’t apply for a card if you’re not eligible, but you’d be surprised how many people apply for credit cards without checking the eligibility requirements first. If you don’t earn very much, or you’re an international student, you may need to look around to find a card provider that will accept your application.

If you mismanage your money

While having a credit card can certainly teach you to be smarter with money, you need to make the effort to make it work. If you keep missing repayments or spending more than you can afford, a credit card may not be the best choice for you right now.

If you don’t think a credit card is the right fit for you, a debit card could be a worthy alternative. Used in much the same way as a credit card, a debit card can be used to make purchases online and in person, both in Australia and overseas. The main difference is, with a debit card you are using your own money, not your lender’s.

Another alternative could be to become an additional cardholder on a family member’s credit card account. With this option, you would still need to be careful with your spending, but you would have help and guidance from the accountholder, which could make it easier to manage.


Educate Yourself

There are instances where a credit card is simply not the right choice. But, if it’s simply a matter of not understanding how to use a credit card correctly, you may find a little education goes a long way.

Which is where Credit Card EDU comes in.

Using our sister site, Credit Card EDU, you can find out all you need to know about using a credit card. From what to look for when you compare credit cards, to learning how to use your card to its full potential, Credit Card EDU contains all the resources you need to get smarter with your card.

Check out the site to find seven easy-to-understand credit card courses, all of which are online and totally free. You can learn at your own pace, and test your knowledge at the end of each course. You’ll even receive a fancy certificate once you pass, which you can print out and hang next to your Bachelor’s Degree (although that might take slightly longer to get your hands on).


How do you compare student credit cards?

Time to compare the options? Here are some of the most important factors to consider as you compare student credit cards.


Find out how much each card charges in annual fees, then compare that with what each one offers in features. If you think you may carry a balance (that is, when you don’t pay off your balance at the end of the month), try to choose a card with a low purchase rate. Also look at any fees that may apply, and work out how you can avoid them.


Check the small print to find out what the card provider expects of you. You will need to be 18 or over, and you will typically need to be an Australian resident or citizen (although some providers accept international applicants as well). You may need to be enrolled in an accredited school, TAFE or university to get a student credit card. Other factors providers may look at include income and credit history.


As we said before, student credit cards tend to be pretty basic. But that’s not to say there aren’t extras to be found. Keep an eye out for online banking and apps for easier account management, features such as insurance covers, and interest free days to help you keep interest costs down.

Introductory Offers

A great introductory offer could waive the annual fee on the card, or help you save on interest on purchases. Just make sure you choose the card because it suits your needs and your budget, not just because it has a killer intro offer. Always think about the long term, unless you only plan on keeping the card in the short term.

Your Student Credit Card Application Checklist

  • Am I eligible?
  • How much will I pay in annual fees?
  • What other fees may apply?
  • How much will I pay in interest?
  • Are there any interest free days?
  • What features are on offer?
  • Does the card suit my needs?
  • Do I have what I need to apply?

You may be asked to provide:

  • Personal information, such as your full name, date of birth, residential address, email address and phone number. This will need to be backed up with a valid form of identification, such as your driver’s licence number, passport number or Medicare number.
  • Student information, including details of the university, TAFE or other institution you’re studying at and the course you’re enrolled in.
  • Employment information, including details of your employer and income if you work outside of study, such as contact details and recent payslips.
  • Other financial information, such as details of any assets and debts, and any ongoing financial commitments, such as rent, bills and grocery costs.


How can you make your card work for you?

Once you’ve been approved, it’s up to you to make the most of everything your card has to offer. You can start by working out a budget. This will tell you how much you have coming in, and how much you need to spend on everyday living. Using that info, set a spending limit on your card that allows you to stay in budget at all times.

When your credit card statement arrives, check it over to make sure it’s correct. That means going through each transaction and querying unknown transactions with your card provider. Your statement will tell you when your payment is due. Aim to pay off the full balance on your card by the due date each month. This will make it easier to stay on top of what you owe, while keeping interest costs as low as possible.

Whether you pay off your balance at the end of each month or not, you can work on paying it down whenever you can, simply by transferring money onto your card when you have cash available. It can also be a good idea to create an emergency fund, so when times get tough, you don’t always need to rely on your credit card.


Photo source: Pexels

Pauline Hatch

Pauline is a personal finance expert at, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.

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