How do credit cards for students work?
Student credit cards can help you manage your finances by allowing you to buy goods and services, then pay for them over time. They’re particularly useful if you’re running low on cash or don’t have access to money in a bank account.
Just like with a normal credit card, you can use your student credit card to spend money up to a pre-arranged credit limit. If you pay the full balance off each month before your statement is produced, you won’t pay interest on what you’ve borrowed.
As a student, you might not have an established credit history: this makes it harder for banks to tell whether you’re good at managing your money. Because of this, the terms and conditions on credit cards for students often aren’t as good as they are for people in full-time employment, or those with a good credit history.
The good news is that student credit cards can be a cheap way to borrow money and add a bit more flexibility to your finances. Depending on the card and your situation, they can even be cost-free.
Vanquis Bank don’t currently offer a specific credit card for students. However, you can find out if you’re eligible for a Vanquis Bank credit card today. Take a look at our range of credit cards and you’ll then be able to check your eligibility:
What are the benefits of student credit cards?
Most of the major banks and many other providers now offer a credit card specially designed for students. These often have helpful benefits like:
- a low credit limit of usually around £500, designed to help you borrow safely
- good flexibility, with up to 56 initial days to pay off what you owe before you get charged any interest
- a great way to build your credit history while studying. This is essential for any future borrowing, like mortgages, standard credit cards, or personal and business loans
- rewards, perks and special offers. Don’t forget though, these benefits are nice but they’re not the most important thing – focus on the terms and conditions instead
Finally, credit cards for students can help you develop good financial habits. This is especially true if you stay within your credit limit and regularly pay your minimum payment on time or pay off what you owe before interest is charged.
Things to look for with a student credit card
Just like with a regular credit card, it’s good to apply for a student credit card with the lowest APR (Annual Percentage Rate) possible. APR is the rate you’ll be charged on any balance you haven’t repaid in full by the date it’s due.
Even if you plan never to have an unpaid balance outstanding, try to keep in mind that finances can be unpredictable – especially when you’re a student. The lower the APR, the easier it will be to repay any interest you do get charged.
Also keep in mind how many days of interest-free credit you get on any purchases you make. This is usually 56 days from when you made the purchase, but it can vary from provider to provider.
Some student credit cards come with a special mobile phone app that sends you regular reminders about your repayment date, as well as how much you need to pay. If you’re the kind of person who forgets things easily, these reminders can be really helpful.
It’s also a good idea to check your credit score before you make an application. As a student, you may not have a credit score yet, but if you’ve ever defaulted on a loan or missed a mobile phone bill, this might have damaged your chances of being accepted.
Tips on managing your finances as a student
Managing your money is an important part of student life, and it all starts with setting a budget for the semester. Your budget should take into account your loan and any savings or income you have, minus your tuition fees, rent, mobile phone bills and any other regular essential outgoings. The amount left over needs to be enough to pay for your food, transport and fun for the rest of the semester.
It’s always best not to assume you need a student credit card: don’t forget, they’re not free money! Instead, think of them as a handy way to shuffle money around. If you can’t repay what you owe, you could get into more debt, and this could damage your credit score.
Frequently asked questions
Do student loans affect my credit score?
No. Taking out a government-funded student loan is treated differently to a standard bank loan.
Are student loans credit-based?
Student loans aren’t normally subject to a credit check. The non-profit organisation that operates the service is called The Student Loans Company, and it doesn’t base its decision on income or credit ratings. This is also true if you’re an older student taking out an Advanced Learner Loan.
Can I pay student loans with a credit card?
You can make repayments toward your student loan with a credit card, but it’s not a very good way of paying it back. That’s partly because there’s a 1.5% surcharge for doing it. In general, it’s better to pay normally, using money you already own or with a debit card rather than with credit.
Which student credit card should I get?
This depends on your situation and how you’ll be using the card. Take the time to research and compare a few different options from the major banks and pay special attention to the APRs and any penalty clauses. It’s also a good idea to go with a lender you trust, because not all credit card providers have your best interests in mind.
Can I withdraw cash using my student credit card?
Yes, but most cards will charge you, and you'll probably have to pay a higher rate of interest for withdrawing cash. Always make sure you check the terms and conditions of your credit card to find out how much this is likely to cost overall. In general, it’s best to avoid using your credit card to get cash because you’ll be withdrawing money you don’t really have (and you’ll be paying extra for the privilege).
Can students get a credit card without a job?
Yes. Compared to mainstream credit cards, the income criteria for student credit cards are usually more relaxed because you’re in full-time education. These products don’t normally need you to have an income, because they’re designed especially for students. If you do have a job, it might be best to look into a non-student credit card which could offer better terms and conditions. For help with this, see our guide to applying for first-time credit.