Student credit cards
Pros of student cards | Compare student credit cards | How to compare | Eligibility | Tips of managing your credit card | FAQ’s
Sick of living off pot noodles? A student credit card can be a good option to learn how to use a credit card – responsibly of course!
With low rates, interest free periods and credit limits, student credit cards can be an affordable way to help you to manage your everyday expenses when you’re studying.
Compared to other
rewards credit cards these types of cards tend to offer less of the bells and whistles and stick to basic features to introduce you into the world of credit cards without getting into a pile of debt.
Pros of student credit cards
Cost-effective
With annual fee waivers, low interest rates these cards can be an affordable way to introduce you into the world of credit.
Credit history
Do as your mum says and pay your debts off on time – that way you’ll build up a good credit history, helping you get loans or other credit cards down the track.
Financial Freedom
There’s nothing worse than feeling like you can’t afford tuition fees, or join in with social activities due to lack of funds.
A student credit card with a low credit limit that you’re able to pay off each month can give you that little bit of wiggle room to help you live life as a student to the fullest.
Cons of student credit cards
Getting into debt
There’s no denying, even with attractive sign up deals, getting a student credit card is a pathway to debt.
We’ve all been there;
“
one more UberEats won’t hurt, just another beer won’t make too much of a difference”
but we all know it all adds up and it can become all too easy to spiral into debt.
If you’re considering a student card, ensure that you do so responsibly with a low credit limit and a sensible payment plan.
Compare student credit cards
When comparing student credit cards, you want to find one that gives you the best bang for your buck!
Comparing cards with no annual fees, low interest rates and interest free days is a good place to start.
How to compare student credit cards
Low credit limit
Whilst a shiny new credit card might sound cool at first, you might not feel that way after a few months of reckless spending and a mountain of debt.
Get a card with a sensible credit limit so you’re more likely to be able to pay off the balance each month.
Credit limits tend to be lower for students anyway usually ranging from $500 – $15k and individual circumstances will be a factor as to how much you’re lent.
Interest-free days
Many cards offer 55 days where you won’t accrue any interest for any new purchases. This can be great if cash flow is a bit tight as you won’t pay any extra on your everyday spending during the no interest period. T&C’s will apply.
Annual fees
Student cards tend to have lower annual fees, and some banks will waiver the first year fee.
Compare student credit cards to find the one that works out the most cost-effective for you.
Other fees
Do you struggle keeping deadlines? If this sounds like you, maybe consider a card with lenient late payment terms otherwise you might find yourself in a heap of fees which isn’t ideal.
Purchase rate
Look for a card that gives you the lowest interest rate for the longest period of time. Student credit card purchase rates tend to range from around 12% per annum (p.a.) to 22% p.a.
Cash advance fees
Make sure you’re not stung with high fees if you think you’ll be using your card at ATMs to get cash out. When you do you’ll be charged between 2% to 3% of what you withdrew. If you take out $100, that’s $3 in fees!
Foreign transaction fees
Heading to Bali with a bunch of mates? Don’t get stung in the sun using your card abroad and paying a fortune in foreign transaction fees.
If you think you’ll be using the card overseas, think of an alternative way to pay like using travel money cards.
Balance transfers
Already got a card with a balance? A balance transfer can be a good way for you to consolidate your debt into one card with no interest on that balance for a period of time.
A good option to help you pay off your debt in a quicker amount of time.
Extras
Some cards come with handy extras like purchase protection insurance or extended warranties- not bad if you’re in need of a new laptop or phone to help with your studies.
How do I know if I can get a student credit card?
Are you eligible for a student credit card? Let’s find out…
Are you a student?
This matters! If you want to apply you’ll usually have to be enrolled in tertiary education, you may even have to be a full time student, or you may have to meet other specified requirements.
Are you old enough?
You need to be over 18 to apply for a credit card in Australia. Alternatively a debit card can be used to pay in the same way, but it’s your money, not the banks.
Are you Australian, or a resident?
Generally speaking, credit card companies only offer cards to citizens or permanent residents, although there might be some options for international students.
Do you have an income?
You’ll need to prove you have enough dough to be able to pay the minimum credit limit of the card, whether it’s from a part time job, student sponsorship or support from your parents.
Do you have a credit history?
Typically a student credit card will be your first credit product so you won’t have a credit history to prove yourself. This generally isn’t as issue as banks know this and make exceptions.
How to win at life with a student credit card
This is a big step, you’ve taken the plunge with that TAFE course or you’re all set for uni, you’re kicking those independence goals… but have you considered your financial future too?
These tips will help you win a life with a student credit card:
Budget!
Some people like to take the money they’ve got to spend for that week all at once and use that as their way of budgeting. Others transfer between accounts, and some spend on their credit card all month (which has a limit) and then pay off the balance at the end.
Whatever works for you, know your budget and stick to it as best you can.
Pay off your balance
Not only does it just make financial sense, you’ll also be building up a healthy credit rating in the process of paying on time.
Don’t overspend
We know it can be tempting to order those spanky new runners that everyone’s wearing, but living within your means is a far better strategy to getting through your uni days in the green, rather than in the red.
Keeping your credit card at home and saving it for textbooks, groceries and emergencies is a good way to curb the temptation to spend.
Have an emergency fund
Your granny is a wise lady telling you to save for a rainy day, or an emergency as the case may be.
Whilst a credit card can be a good back up in a time indeed, it’s far better to have a savings pot you can dip into if times are tough.
Have some life goals:
It’s time to manifest the sh*t out of life. This is your time to dream big!
Do you want to be an astronaut? Fix climate change? Buy a sick set of wheels? You won’t do that if you come out of studying with a heap of debt (well probably not!).
Having these goals will motivate you to think towards the end goals and not overspend on the stuff you don’t really need. If you have a part time job, put some aside each week, every little counts.
FAQ’s
Should I get a student credit card?
Good question! Before you sign on the dotted line do your due diligence. Compare all the different cards and their benefits and calculate your monthly expenses to ensure you can manage the amount of credit on offer without it becoming a problem financially.
Are student credit cards a good idea?
If used wisely, student credit cards can be a great way to offer financial freedom and build up a credit history, which will become helpful when you graduate and need to rent an apartment for example. Opening a credit card should never be taken lightly however, so make sure you read the terms in fill to understand what you’re getting into.
What are student credit card age limits?
You must be over 18 years old in order to apply for a card and be enrolled in tertiary education.
Do I have to pay off the full balance each month?
It’s recommended that you do, however you are only required to pay a minimum repayment at the end of each statement period- this is usually only a small percentage of what you owe.
Remember by only paying the minimum you will incur interest on the rest of the balance.
What documents do I need to get a card?
To make the process as quick as possible, you can get the following items ready. You’ll need a valid form of identification, such as your driver’s licence, passport or Medicare card. Proof of study including details of your course and institution.
Details of your job (if you have one) with info on your employer and payslips. You may also be required to provide other financial information such as savings, assets, debts etc.
What if I miss a payment?
Becoming a student and learning to be independent can be a scary journey to navigate. We know responsibility sucks, but just because finances can be boring, doesn’t mean you can’t be on top of your life-admin.
Missing a bill will affect your credit history and future card applications, or any loans you might want to apply for – so have a word with yourself to keep on top of your finances.
Debit or credit – that is the question?
Whilst they can often be used in the same way, the one major difference between the two is your money vs the banks.
Debit cards are good as you won’t run into a pile of debt, but credit cards can ease some of the financial burdens that come with being a student.
Work out the pros and cons for your personal situation, just because all your mates have credit cards, doesn’t mean it’s the right decision for you.
Which is the best credit card for students?
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Which credit card is best for international students?
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Conclusion
Low interest rates, low credit limits and building a credit score are three reasons why a credit card might be right for you. Compare and review a range of student cards today to find the right one for you.
General Advice Warning
The information provided is of a general nature only and does not take into account any personal objectives, financial situation or needs. Before making a decision you should consider the appropriateness of the information having regard to your personal circumstances. Always read the full terms and conditions.
