Student credit cards

Student credit cards can help you manage your cash flow, cover emergency costs and build your credit rating. Find out about their pros and cons and whether a student credit card is right for you.

Eve Powell
Eve Powell
Updated 25 May 2022  | 3 mins read

Key points

  • A student credit card may be right for you if you’re studying, have a low income and little or no credit history
  • They usually have lower spending limits than standard credit cards
  • Using the card responsibly over several months can increase your chances of being offered a higher credit limit in the future and improve your credit score

Can a student get a credit card?

Yes, there are special credit cards designed for students enrolled in school or university.

You’re unlikely to be approved for a standard credit card if you’re not in full-time employment or haven’t got a credit history.

Student credit cards are designed for people in this situation who won’t qualify for regular credit cards.

Who can take out a student credit card?

To be eligible for a student credit card you’ll need to meet some criteria. This may require you to:

  • Be aged 18 or over
  • Be a UK resident
  • Have a student bank account with your chosen card provider
  • Be on a registered course that lasts at least two years

Failed applications for credit cards can affect your credit score, so you may want to use an eligibility checker to see whether you’re likely to be accepted for a card before applying.

How does it work?

Student credit cards can be a great way to manage your finances while you’re studying and often have helpful benefits.

Working in a similar way to standard credit cards, you can use the card to spend up to a pre-agreed credit limit.

As students are seen as riskier to lend to because of smaller incomes and minimal borrowing history, the credit limits are usually lower - often around £500 to £1,500 - and the interest rates are normally higher.

If you pay off the balance in full each month you won’t incur any interest, but you should be aware of the card’s annual percentage rate (APR) before you take one out. This shows you the interest rate you’ll be charged on any outstanding balance you fail to clear.

How is it different from a normal credit card?

While there are similarities to standard credit cards, student cards differ from these because they:

  • Offer lower credit limits to offset the extra risk
  • Tend to offer fewer rewards
  • May provide special benefits specifically for students
  • Have a higher interest rate

What do I need to consider before applying?

Just like any type of credit, you’ll need to decide whether you’ll be able to spend within the limit and manage your card sensibly.

Student credit cards can be a great tool if you know you have money coming in shortly, like a student loan payment, but you need to cover the gap in the meantime.

But it’s worth remembering that if you don’t pay off your balance in full each month, you’ll be charged interest and this can quickly add up.

Not making your payments on time, or going over your credit limit, can affect your credit score. This can make it much harder to be accepted for a loan or credit card in the future.

So think carefully about whether a student credit card will work for you.

How do I use a student credit card?

The best way to make the most of your student credit card is to use it responsibly. Read our tips on how to manage your card and your spending:

  1. Only buy things if you need them

    Don’t use the card as a licence to spend and make sure you can afford to make the repayments

  2. Pay your statement balance in full

    The longer you take to pay what you owe back, the more interest you’ll be charged and the more debt you’ll rack up

  3. Set up a direct debit

    Doing this or setting up a reminder will help to make sure you don’t miss a payment and incur late payment fees

  4. Don’t spend more than your credit limit

    The best way to use your card is to only use up to 30% of your credit limit

  5. Use the card for necessary high-value items

    Purchases that cost between £100 and £30,000 are covered by Section 75 of the consumer credit act (CCA), so you’ll be protected if the item’s faulty or the company goes bust

  6. Avoid using it to withdraw cash

    You’ll likely be charged a cash advance fee and interest from the day you take out the money

  7. Don’t let friends use your credit card

    It might seem obvious, but it’s best not to mix friends and finances, as you’ll be the one responsible for paying back the charges

What are the benefits?

There are several advantages to having a student credit card and used well, you can really make it work for you.

The benefits include:

Building a credit history - If you manage your card well and make your payments on time and in full, you can start to build your credit score

Increased chance of acceptance - These credit cards are designed for students who wouldn’t normally qualify for standard credit cards

A low credit limit - This can help to keep your spending in check and prevent you from spending more than you can afford

No annual fees - Most student credit cards won’t have an annual fee, but you’ll need to avoid incurring other charges for things like late payments

Improving money management skills - Making sure you pay on time and don’t exceed your credit limit can start good habits for later in life

Providing emergency funds - When you don’t have immediate funds to hand for unexpected costs, a student credit card can help temporarily fill the gap

Special student rewards - Some cards come with rewards like early tickets for gigs, retailer discounts, or even cheaper travel via railcards

Section 75 payment protection - This means larger payments on the card are protected if something goes wrong

What is the APR on a student card?

APR stands for annual percentage rate. This is the cost of borrowing money over a year and the rate will vary between cards.

Student credit cards often have a higher APR than standard credit cards to encourage you to spend wisely.

A typical student credit card APR can range from around 20% up to more than 30%. To help you choose a card, you can use the APR to compare interest rates across different providers.

If you can pay off your balance in full each month your credit card’s APR won’t affect your finances.

What are the disadvantages of a student credit card?

While a student credit card can provide you with some financial flexibility, they’re not for everyone. So it’s important to consider some of the potential downsides, including:

  • They typically have a higher APR than a standard credit card
  • If you borrow more than you can afford to pay back, you’ll risk falling into debt
  • Rejected applications for a card can affect your credit score
  • You’ll be charged interest on top of your balance if you don’t pay it off in full
  • Irresponsible use of your credit card can negatively affect your credit score
  • You’ll be charged a cash withdrawal fee if you use your card to take out money
  • The low credit limit may not be enough to meet your needs

Can I get one if I don’t have any income?

To get a student credit card you’ll need some form of income, so the lender has some reassurance you’ll be able to pay back any money you owe.

This income can come from:

  • A student loan
  • Regular payments from your parents
  • A part-time job

Bear in mind that most lenders won’t accept a student loan on its own as income, as this would mean paying off one debt with another.

And remember that if you don't have an income, you’re likely to struggle to make your repayments, so it’s best to consider alternative options.

What if I have a bad credit rating?

This will depend on the card provider, because in some cases having a bad credit rating may totally disqualify you from taking out a card.

Some may still accept your application, but you’re likely to be given a smaller amount of credit and a higher interest rate than normal.

If you have a bad credit score this will make it much harder for you to borrow money in the future - for example, if you wanted to take out a loan or a mortgage - so it’s worth taking steps to try and improve it.

How do I improve my credit score if I’m a student?

As far as lenders are concerned, no credit history is as bad as a poor credit rating - they’re keen to see evidence that you’ve reliably repaid any money back you’ve owed in the past.

But there are ways you can start to build a credit score as a student:

  1. Join the electoral roll

    It’s easy to register online and is a really simple way to improve your credit score

  2. Make sure the details are correct

    You can check your credit report by using one of the credit reference agencies like Experian or Equifax

  3. Pay your bills and repayments on time

    If you’re good at paying your bills on time, including mobile phone contracts and monthly rent, this can help boost your score

  4. Get a student credit card and use it responsibly

    If you can use your card within the credit limits and make all your payments in time and in full, this will help improve your rating

  5. Don’t make multiple credit applications

    Every time you apply it leaves a footprint on your credit report, so space out applications and only apply if you need to

Should I use my student loan to pay off my credit card debt?

It’s generally not a good idea to do this, because you’d effectively be paying off one debt with another.

Although if you’ve got no other means of paying off your credit card, using your student loan is an option.

The interest rate you’re charged with a student loan is considerably lower than a credit card, so it’s always best to pay off the highest APR debts first.

But bear in mind that using money from your student loan might leave you short of cash in other areas where you need it, like paying for rent and living expenses.

What happens to my card after I graduate?

Once you graduate, you’ll still be able to use your credit card as normal.

But if you’ve used your card responsibly and have started to build a good credit score you may be offered a new credit card.

This could be one with better interest rates or with 0% interest on new purchases or balance transfers for a set period, as well as rewards like cashback.

What are the alternatives?

You might find there are alternatives to a credit card that are a more affordable way of helping you manage your cashflow during your time as a student.

For example, you could consider opening a savings account and putting some money aside for emergencies.

And most banks will give you a 0% interest overdraft when you open one of their student bank accounts - with many offering tiered overdraft amounts that increase with each year of study.