Student credit cards can help you achieve your financial goals and manage your expenses while you’re studying. Compare and find the right student credit card for you.
A student credit card can help you manage your finances while you’re studying for your degree. Designed for students who are 18 and older, you can compare cards for almost every lifestyle. Whether you’re looking to cut costs with no annual fee or low interest rate, need to consolidate a debt with a promotional balance transfer, or have your eye on extra features such as complimentary covers, you can find a student credit card for you. These cards generally come with lower credit limit to help keep your spending in check.
If you need to fork out for text books, school supplies and tuition fees, compare the student credit cards available below to find the right credit card for you.
Student Credit Card Offer
ANZ First credit card is a great card for students. For a limited time you can apply for this exclusive offer which features a low introductory rate on purchases and balance transfers.
- $30 p.a. annual fee
- 0% p.a. for 3 months (reverts to 19.74% p.a.) on purchases
- 0% p.a. for 12 months on balance transfers
- Cash Advance Rate of 21.49% p.a.
- Up to 44 days interest free
- Minimum Income Requirement of $15,000 p.a.
Student Credit Cards Comparison
Rates last updated June 25th, 2016.
- Citi Simplicity Card
11.99% for 24 months if you apply and are approved by until 31 March 2017
April 5th, 2016
- Commonwealth Bank Low Rate Credit Card
BT offer extended + cashback updated from $150 to $250 and will be available until 30 June 2016.
April 15th, 2016
- Bankwest Breeze MasterCard
Get 5% (up to $300) cash back* offer + 2.99% p.a. for 9 months on balance transfers
May 18th, 2016
Student credit cards review
- Weigh your options carefully and choose which gives you the most advantage. In Australia, there’s a variety of student credit cards to choose from. Compare features thoroughly before making a decision.
- Check on additional fees. Read the fine print at all times and carefully analyse other fees associated with your card for spending beyond your limit, late payments, etc.
- Stay within your budget. As a student, your income can be limited to your part-time job or to an allowance sent by your parents. Don’t go beyond your limit and spend within your means.
- Compare rates. Some cards are advertised with low fees or a low rate, but closely compare the ongoing rates offered by a number of cards to get a clear idea of how much you will have to pay.
A guide to student credit cards
Student cards are issued as both debit and credit cards, and you will only be issued a card if you are a verifiable student. A debit card is a great option for you as a student as you are limited to spending the money you already own. Using a debit card prevents you from developing the bad habit of accumulating debt as you could easily do with a credit card.
What is a student card?
Student credit cards provide you with a low revolving balance, a low monthly repayment amount and a low interest rate. Managing a student credit card should be within your reach given that the repayment amounts are kept small and also because the low credit limit prevents accumulation of a large debt.
The following points are the essential details for you to understand before applying:
- Having a student credit card allows you the benefits of meeting your expenses without the added burden of quickly going into debt. The credit card limits and the interest rate are purposely low to prevent that from happening.
- Using the student credit card wisely will allow you to build a good credit history. This can done by not maxing out the credit limit and repaying the balance when required. This will help establish your financial responsibility and will show your bank that you are managing your debt and not living off your credit card.
- Developing a good credit record in this way will cause other credit card companies to take note and may extend to you credit cards with greater balances and higher interest rates. It may be a temptation for some students to accept additional credit cards offers and then start to accumulate unnecessary debt spread over a number of different cards.
- If you do not properly manage even a low credit limit credit card with a low interest rate, you can quickly accumulate debt. Using student credit cards over the period of your education in a disorganised way will result in a financial disaster as you max out your card and interest payments on the unpaid balances.
Should you select a student debit card or a student credit card?
The essential difference between a student debit card and a student credit card is that when you use a debit card you are using money that you already have. This money can be used for the purchase of anything, just as a credit card but there is no chance that you will overspend and get yourself seriously in debt.
With a credit card however, your spending involves using other people’s money or money you do not have. There is a much greater risk here of spending excessively and getting yourself seriously into debt. For this reason, it’s a lot safer to use a debit card. Many people use credit cards to cover sudden unexpected emergencies, but better planning for these events involves saving over time.
Choosing the right student credit card
Before making a student credit card application look at the following:
- Skip rewards for now Most student credit cards won’t come with a reward system because of their competitive interest rates and annual fee. The main point of the card is so students can learn how to use a credit card and manage their money, and this can be done without the motivation of rewards and points.
- A student credit card Being offered from your existing bank may not be the ideal card for you. Check around at other places as well to see what’s in the market.
- Be smart about your use of the card Set up a budget before getting a card and make sure you work it to your advantage. Aim to pay back the balance in full every statement period.
- Check what any additional fees are on a cardLate payment fees, over limit fees and also what the grace period is as this differs from card to card
- Don’t fall for the ‘sales hype’ When choosing your card as that is only instant gratification, it is the long term cost of the card which will be the real advantage or disadvantage.
How does a student credit card work?
A student credit card is designed to help students, especially those who will be studying away from home, with their financial needs. Your parents will save time in sending your allowance weekly or monthly and you can have an immediate access to funds in case emergency situations arise. This is a great way to help students establish their credit history and stay above their finances.
Student credit cards work in the same way as regular credit cards, though they usually come with a lower credit limit. Most card companies offer waived annual fees for students and a lower annual percentage rate (APR).
A student credit card can be an effective account management tool for students as you can pay your bills, shop online and buy school supplies. Some student credit cards offer cash rebates on groceries and other purchases, as well as rewards and incentives to encourage spending.Back to top
Tips for using your student credit card
Simple tips to control your student credit cards
- Make a commitment to use your credit card only on items that are essential. That is needs rather than wants. It can be a good idea to leave the card at home then go back the next day if you still really have a dire need to own the item. This strategy usually stops impulse spending which will run up a credit card in no time.
- Try to pay cash for all your everyday spending, especially for entertainment. If you don’t have your card on you, you won’t be tempted to spend more than you should. Credit card spends still have to be paid back and if they are not paid on time you will incur fees, and if not fully paid you will have interest to pay on unpaid balances.
- Have a written monthly budget then break that down to a weekly budget. That way if you spend too much one week you know you will only have to wait until the next week before you can spend again. The same with paying off your credit card. Do it in small frequent payments and you won’t miss it. This is a great strategy that gets the minimum payment done each month. If your expenses outweigh your income you need to realise that a credit card is not the way to make up the difference. Either increasing your income or lowering your expenses is the only way that you can solve this problem without causing further problems at a later date.
- Try to save a portion of your income in an emergency account. It is usually suggested that 10% is a good figure to put aside each pay. If you can’t make 10% try and make 5% because this will be so helpful should you fall sick or have an accident.
- When setting up a budget, make sure you have some money in there for self-indulgence. Too tight a budget means that you will probably splurge at some stage and put yourself in an undesirable financial situation.
Avoid using your credit card if the cost is not in your budget
- You will not have the money to pay it off in full during the next billing cycle. It is possible to pay part cash and part credit.
- You are spending on a want instead of a need. There is a big difference here and it is often this spending which will blow out your credit card balance.
- If you are doubling up on items or services just for the sake of convenience. For example, you may have a great student discount on food at your campus, but you can’t be bothered going back for a meal so you buy a meal on credit card off campus.
Managing your finances responsibly with a student card
There are several pointers you can follow to help manage your student credit card responsibly.
- Set your financial goals and realise that you cannot have everything you want right now. You should realise that you will only achieve your larger goals later in life by slowly accumulating a savings fund today for those things. This savings should be added to from every source of funds you acquire. You may decide to deduct 10% or 15% of all money you receive and contribute that to your savings. This should provide some motivation for you to stay clear of debt and to save consistently towards your larger goals. When you discipline yourself this way with your money, it becomes less likely that you will be frivolous with your money and spend it needlessly.
- Create a budget for yourself, but be realistic and allow for recreational spending without spending money needlessly. Attempt to live within your means, and only purchase those items that are necessary and that you can afford to pay for when the credit card bill becomes due at the end of the month. Resist the temptation to spend using your student credit card because of the ease of just swiping the plastic to get impulse purchases.
- Consider emergency situations that may come up and require an outlay of money. Rather than rely on the use of a credit card in such situations, set aside some money to help cope with it. This will prevent you going into debt when an emergency arises. You may already be experiencing stress over the situation, and to have to deal with going into credit card debt to handle the situation, only adds to the emotional trauma you may be feeling.
As much as possible, limit your use of your credit card and stay on a cash basis when making purchases. In this way you will only spend cash amounts you have set aside for your purchases and will not create unnecessary debt for yourself.
- Develop the good habit of paying off your credit card balance in full at the end of each month. This will quickly build your credit rating and will give you a sense of accomplishment in managing your student credit card responsibly. This habit will carry you forward into your adult life beyond college. Developing these good habits will allow you to live your dream life even though you may not have a great deal of money. Your good credit rating will become your way of achieving and getting the things you desire for your life. But those habits must be learned now and practiced consistently and persistently.
Be aware of repayment failure consequences
It is difficult for many students to completely understand interest rates. They need to be sure to always pay the full balance on their accounts and they need to understand that if they only make minimum payments, the interest is going to significantly increase their total debt. A majority of students have no idea that when they do not pay off their balance every time, interest keeps accumulating, and they can run the risk of the lender increasing that interest rate. Also, the chance of going over the allowed spending limit increases and their spending power will decrease. If students and/or parents need help understanding the proper usage of a student credit card, there are many resources online and at schools, local libraries, and credit centres everywhere.Back to top
What happens when payments are missed?
Not making payments on your student credit card will cause your debt to increase very quickly. This is because interest will continue to accrue above the interest and before long you will quickly exceed your limit. This will incur over the limit fees and your bank may even increase your interest rate, which will further compound your debt. Credit lenders will take note that you are accumulating debt and will raise your interest rate based solely on that irresponsible financial behaviour.
Think about your credit history
This situation will cause harm to your credit rating and prevent you from getting additional credit later. Even if you are approved for credit later for a car or for a home loan, you will be charged a much higher rate of interest due to your impaired credit report.
When your credit becomes impaired it is not the end of the world. Bad credit can be repaired by careful planning and working with your creditors to negotiate a repayment plan you will be able to manage to bring your credit back on track. The last thing you should do is not contact your creditors when you feel you are getting over your head in debt.
Creditors have a vested interest in your meeting your financial obligations and they will work with you and help you to pay off your debt. There are several ways they can structure a repayment plan, one of which may involve temporarily reducing your interest rate and also reducing your monthly payment amount.
Healing an impaired credit score now while you are a student will go a long way towards making you financially responsible as an adult. A bad credit score shows that you are a credit risk and lenders will be hesitant to offer you credit in the future. If credit is extended to you with a bad credit score, you will be charged much higher interest rates and fees than a person with a good credit rating.
Dangers of student credit cards
Drawbacks of student credit cards
As a student you will generally have little income and no credit history, that is why you will be asked for requirements that are not commonly asked in applications for other traditional credit cards. Here are some of the drawbacks of student credit cards:
- Enrolment in an accredited school. Before you will be able to apply for a student credit card, you must be enrolled in an accredited school and should be a full time student. Normally you need to be an Australian citizen or permanent resident, be over the age of 18 and have a steady stream of income. This could be a part-time job, or a casual job with regular shifts.
- You may need a co-signer. You may need a co-signer, usually your parent or your guardian, who will be responsible for paying your debts in case you’re unable to do it.
You have the choice whether to apply for a student credit card or not. You need to know how much you’ll need and you also have to weigh-up whether the high interest would justify owning your own credit card or if it would be better to have a supplementary credit card from your parents or guardian. Prior to applying for a credit card, you might also want to compare the features first because different financial institutions offer different features. Credit cards for students do provide a lot of financial freedom for any student, but know the drawbacks first before applying for one.Back to top
Types of credit cards designed for students
- Low-rate cards. These student credit cards offer a low interest rate on ongoing purchases and up to 55 days interest-free.
- Rewards cards. Earn rewards every time you use your card, either in terms of cashback offers or reward points.
- Balance transfer cards. These student credit cards allow a balance transfer at a low interest rate, often 0%.
- Introductory rate offer. Lower interest rates can be part of your credit card’s introductory offer, while another common promotional offer is a waived annual fee for the first year. Make sure you are aware how long the offer lasts so you can take advantage of it.
- No-annual-fee cards. Some student credit cards are offered without annual fees as long as you are enrolled as a student in an accredited school or university. This can help you save a significant sum of money but still lets you use your card for purchases.
Features of these credit cards
- Fraud protection. Student credit cards enjoy the same security and protection in case of unauthorised usage as other credit cards, provided that there is no contributing negligence on your part and you have informed the bank promptly of any loss.
- Low interest rate on balance transfers. Some student credit cards offer no interest on balance transfers for up to 12 months so you can take advantage of the interest-free period to pay off your balance. Remember, these are for a specific period so don’t wait until the offer expires. Others offer a competitive rate on balance transfers so you can easily get rid of your debt.
- Interest-free period. Enjoy an interest-free period of up to 55 days from the start of your statement cycle. This can carried on if you pay your balance in full every statement period.
- Competitive interest rate on ongoing purchases. Most student credit cards either offer a low interest rate on purchases.
- Make contactless payments. With Visa PayWave or Mastercard PayPass, you can make contactless payments for minimal purchases so you can save time when you are in a hurry.
How to apply for a student credit card
What to look for when applying
When selecting a student credit card apply for those which provide balance transfers from other branded credit cards and provide a good introductory interest rate, those with low interest rates, those with no annual fees and those that supply security features which may provide a good benefit to you.
When applying for a student credit card, do your due diligence and properly research the many card offerings on the market. Compare the interest rates of the cards available to you and read all the fine print regarding your rights and responsibilities as a cardholder. Establish that you meet all the eligibility requirements and then apply to the card of your choice.
If you have decided to get a student credit card, it’s wise to compare the various options carefully. Once you’ve found the right card for you, click ‘Apply Now’ to begin the application process.
To be eligible for a student credit card, take note of the following requirements and be sure you meet them:
- Age. You need to be over 18 years of age in order to apply for a student credit card.
- Australian citizen or a permanent resident.
- Enrolled in an accredited school or university.
- Co-signer. You may need to provide a co-signer who can either be your parent or guardian. The co-signer will then be responsible for your debt in case of default.
- Savings account. You must have a savings account with the bank with which you apply for student credit card.
A student credit card can give you the power to manage your expenses and is a handy financial aid, especially when emergency situations arise. If a student credit card sounds like the solution to your financial problems, apply for one today.
Photo thanks to Alexander Redmon from Texas, US.Back to top