Credit Cards for Students

What is a student credit card?

A student credit card is designed especially for students, typically offering low spending limits and a low annual fee. For anyone new to credit, it can be difficult to get approved for a standard credit card. With no history of credit or consistent employment to assess, these applicants may seem too risky for some card providers. Which is where student credit cards come in.

Card providers offering student credit cards tend to offer more lenient eligibility requirements, allowing students who are unable to prove their credit worthiness a chance to apply for a credit card. As these cards are provided to applicants who are untested in the world of credit, they generally don’t offer high credit limits.

With a low or no annual fee, student credit cards also tend to be fairly simple. That means no fancy features and for the most part, no rewards programs. However, this can be of benefit to you if you are new to credit, as it allows you to focus on spending only what you need to spend, to then pay off what you owe before interest starts accruing.

Would a student credit card be right for you?

Just like any other type of credit card, student credit cards won’t work for everyone. So, how do you know if you should apply for this type of card?

• You are a student. If you choose a student credit card, you will usually have to meet certain requirements set out by the card provider. This may mean you have to be enrolled in tertiary education, you may have to be a full time student, or you may have to meet other specified requirements. If you are unsure, check with the provider before you apply.
• You are eligible. Aside from stipulations regarding your student status, you will also have to meet certain eligibility requirements. To apply for a credit card in Australia, you typically need to be an Australian resident aged 18 or over. Card providers may also have a minimum income requirement, but for student credit cards, the amount is usually quite low. You may also find the potential sources for that income may be more flexible than on standard credit cards.
• You understand how credit cards work. Your first credit card is always going to be a learning experience, but you should still understand the basics before you apply. That means understanding that you only spend what you can pay back, and that you should always clear your balance each month to avoid interest accruing.

What can a student credit card offer?

Now you know you can apply for a student credit card, it’s time to look into why you should. Want to know what a student credit card could offer you? Let’s take a look at the highlights.

• A student credit card can give you access to credit. The main purpose of a credit card is to provide access to credit. That basically means you can use it to buy stuff now, and pay it back later. While using a credit card can take some getting used to, it can be a seriously handy tool. You simply need to make sure you only spend now what you can afford to pay back at the end of the month.
• A student credit card can offer access to features. While student credit cards tend to be pretty basic, they can offer a few handy features and extras. Whether you opt for a Visa or Mastercard, check out the extras offered by your card issuer, as these may not be fully advertised by your card provider when you apply.
• A student credit card can help you understand how credit works. Chances are this is your first foray into the world of credit. While the premise behind how credit cards work is quite simple, that doesn’t mean making them work for you is easy. But, with a little practise, you should become more confident with using your credit card correctly over time, to allow you to graduate to a more advanced credit card later on down the line.
• A student credit card can limit the potential for problems. Student credit cards tend to have a low credit limit, at least to start with. You can also choose to lower your credit limit if you want. With a lower credit limit, there is less temptation to overspend, helping you to keep a handle on your spending.
• A student credit card can help you build your credit. One of the great things about student credit cards is the potential they provide to help users build their credit. As long as you use your card wisely, you can use it to build your credit over time, to make it easier to get approved for more credit when you apply in the future.

How do you make a student credit card work for you?

Making your student credit card work for you is the key to your success with credit cards, both now and in the future. Here are some tips to keep in mind both when you are using your card, and when you are applying for it.

TIP 1. Understand what your card provider expects of you before you apply. This means checking the eligibility requirements on the card, and making sure you meet every single one of them. Reading the small print will help you understand how the card works, while also helping you to get the most out of it.

TIP 2. Don’t think of your credit limit as a challenge. When you are approved for a credit card, your card provider will provide you with a credit limit it deems affordable for you. But, just because you can spend up to that limit, doesn’t mean you should. Only use your card to pay for stuff you know you can pay back, and avoid stacking up debt on your card that will become unmanageable.

TIP 3. Always pay off your balance at the end of each month. While it can be tempting to only pay the minimum payment, doing so will mean you pay more in interest, while you stay in debt longer. When you clear your balance each month, you can stay on top of your spending, while taking advantage of features such as interest free days on your purchases.

TIP 4. Avoid cash advances. Your credit card does not work in the same way as a debit card. Withdrawing money on your student credit card will mean paying more in fees and interest, with interest accruing from the day one.