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. These types of cards can be easier for students and first-time cardholders to be approved for.

That's because these cards have less risk (lower interest rates, fees, or credit limits) which minimised the risk for the lender.

You probably won't find fancy features or rewards programs. But, they're a good way to wrap your head around the safe use of credit cards.

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. You may need to be enrolled in tertiary education, be a full-time student, or meet other specified requirements. We'll include that information in the card review under Eligibility Requirements.
• You meet other criteria. You'll usually need to be an Australian resident aged 18 or over. Some cards require a minimum income, but student credit cards either won't or the amount will be quite low.
• 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 includes how interest-free days work, spending only what you can pay back, and paying off your balance.

What can a student credit card offer?

• Access to credit. Credit means you can buy stuff now on "borrowed money" and pay it back later. But, you need to only spend what you can afford to pay back.
• Access to features. A student card might be basic, but can have handy extras like cashback or insurance that protects you from fraud.
• Understand how credit works. A student card is a good way to figure out how credit works before jumping into a more advanced card with rewards programs, higher fees and travel perks.
• Help build your credit. Building a credit score by being responsible with a credit card can help you with other lines of credit down the track, like personal loans or home loans.

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.

Pros and cons of student credit cards

Top tips for using your student credit card

• Choose the right card: Compare the options using CreditCard.com.au, to find the card that best suits your needs. Keep in mind annual fees and interest, and don’t be swayed by more expensive cards offering extras – especially rewards – that you don’t need.
• Create a budget: Look at how much you have coming in, and how much you need to spend. Then create a budget that allows you to spend within your means.
• Set a spending limit: Once you have created a budget, you will know exactly how much you can spend each month. Set a spending limit on your credit – and don’t go over it. Some card providers allow you to set spending limits on your card to help you if your willpower is low.
• Use your card only for the essentials: When you first start using your credit card, you may want to keep it for essentials only. This should make it easier to pay off at the end of the month.
• Keep track of your spending: It can be all too easy to keep on spending on your card, thinking you’ll deal with the fallout later. Sometimes you don’t want to know how much you’ve spent because it’s a bit too scary to deal with. However, if you make a habit of keeping track of your card spending – either online or via the card’s app – it may help prevent you from overspending.
• Clear your balance each month: The best way to deal with a credit card is to pay it all off each month. This can help you to keep on top of your spending, while also avoiding interest accruing on your balance.
• Pay as you go: You don’t have to wait until your statement arrives to pay off your credit card. You can transfer money onto your card to pay down your balance whenever you like. This can be a great way to avoid spending more than you can afford to pay back.
• Create an emergency fund: While credit cards are great for emergencies, what happens if you can’t afford to pay off that emergency purchase afterwards? Instead of relying on your card as backup – and paying too much in interest if you can’t pay it off right away – work on creating an emergency fund instead.
• Don’t get in over your head: When you’re new to credit – or even when you’ve had a credit card for years – it can be amazingly easy to get in over your head. Avoid overspending, and create good habits to clear your balance in full each month. And, if you get into trouble, seek help straight away.