Best Student Credit Cards 2023: Interest, Overdrafts & Cashback Rewards

The best student credit cards and how to use them.

Student credit cards can be quite scary and if you don’t understand how they work or use them irresponsibly you can end up in a lot of debt. However, credit cards also have lots of advantages and benefits when used properly. For students, a credit card can help your money to go further, improve your credit score and give you some cool perks too. Here’s everything you need to know about credit cards and how to responsibly use them.

How do credit cards work?

Credit cards are basically a way to pay for things, without actually paying for them straight away. When you get a credit card it will have a pre-approved limit and the money on the card is yours to spend, but it’s a loan from your credit card company so you’ll have to pay it all back eventually. Everything you spend on your credit card you need to pay back, normally with interest added and at an agreed date.

Each month you’ll have to pay off some of your credit card balance, you can choose to clear the balance in full or pay back the minimum amount required. However, if you only pay back the minimum required each month it will take a lot longer to pay off and you’ll start piling up the debt. Also, while your credit card will have a pre-approved limit, it doesn’t mean you can spend it all in one go. Hitting or going close to your limit can be seen as irresponsible spending and in turn, it can really affect your credit score, but if you stay below your limit and pay back regular instalments each month it can increase your credit score. Confusing, we know, so getting the balance right is key.

What is a student credit card?

Student credit cards work the same as regular credit cards and they tend to have lower limits and benefits, but they’re good for students who need a credit card and won’t be approved for a standard one.

When you apply for a credit card, lots of things are taken into consideration as credit card companies want to check that you’ll be able to repay anything you spend and look at your job, income and credit score when deciding if you’re eligible for a credit card. Of course, the majority of students won’t have a good credit score yet, or a job or high income so a lot of companies won’t approve students for a credit card.

Student credit cards are designed for students who might not have a good credit score yet to help build your credit score and to support your income. Generally, you’ll need to be over 18 and enrolled in a UK university course to be accepted for one.

Do you need a credit card?

Getting a credit card is a big decision and one that could have negative consequences if not used responsibly, so if you’re considering getting one as a student it’s best to fully weigh up your options. If you have a part-time job and you’re regularly getting paid, a credit card could be a good idea to help your money go further as you already have an income, so you know you’ll be able to pay off some of your balance each month.

If you don’t have a part-time job or tend to dip into your overdraft getting a credit card might not be the best idea as it can promote bad spending habits and you might not be able to pay off your balance. However, a credit card is also a great way to improve your spending habits and your credit score if you use it correctly. As a student, you definitely don’t need a credit card but if you’re considering getting one make sure you know both the benefits and the disadvantages. There are other ways to supplement your student loan and support the cost of living while in uni such as overdrafts, part-time jobs and side-hustles that won’t leave you in debt and are a better option.

Student credit card benefits

It can improve your credit score– one of the main reasons people get credit cards is to improve their credit score. Having a low credit score can make it hard to be approved for loans such as getting a phone or car on finance, renting a flat or applying for a mortgage later in life, so a lot of people like to get ahead of the game. You can build your credit score by getting a credit card and using it responsibly, spending small amounts on your credit card, not going over or near the credit limit and paying back a decent chunk each month, by the set repayment date.

Money management skills– if you’re bad with money, getting a credit card can actually help to teach you some of that responsibility. When you get a credit card you might think you’re being given the opportunity to spend it all in one go, but actually, that will negatively impact your credit score and land you in debt. Having a credit card and showing that you use it sensibly and pay off part of your balance each month can teach you key financial responsibility skills that are important for the rest of your life.

Rewards– some credit cards come with rewards schemes like cashback or perks for being a member and many come with an interest-free period when you first sign up.

Emergencies– credit cards are handy to have in case of a serious emergency or if you’re completely out of cash and waiting for your next student loan payment. You never know when you might need to pay a large bill, such as fixing a broken laptop, a very expensive taxi fee to ensure you get home from a night out safely or unexpected prescriptions.

Things to consider when applying for a student credit card

Credit score– while student credit cards can improve your credit score they can also make it worse too if you miss repayments or if you max out your card or go too close to the limit. Applying for too many credit cards in a short amount of time can also negatively impact your score, so if you’re applying for one make sure it’s one you have a good chance of being accepted for.

Repayments– everything you spend you need to pay back, normally with interest and it’s easy to get carried away and spend more than you can afford to pay back.

Penalties– you normally can’t withdraw money from an ATM or spend money abroad without being slapped with a significant fee. Also going over your limit can also come with a lot of interest. Having a poor credit score and using your credit card badly means you might struggle to be accepted for another credit card later in life as well as not being able to get a mortgage or rent a home. The APR (interest rate) can also be really high on student credit cards, so if you’re not paying off your full balance each month you can expect some pretty high interest added on to your existing balance.

Best credit cards for students 2023

When looking for a student credit card, it’s best to look at comparison sights such as Money Supermarket or Compare The Meerkat to see what’s out there and what you’re likely to be accepted for. This saves you from making too many applications and being rejected, which will negatively impact your credit score and put companies off from wanting to accept you for a credit card. Here are some of the best credit cards for students in 2023:

When applying for a student credit card your personal circumstances could impact how much your limit is, so this may be different for everyone.

Should you get a student-specific credit card or not?

If you are considering getting a credit card, it’s up to you whether or not you go for a student-specific credit card or a general one. As a student, you will have a higher chance of getting approved for a student credit card over a regular one, and the restrictions in limits may be more useful to you as it will be less tempting to spend.

Student credit cards can be a good introduction to credit cards, but if you are considering getting a credit card for university, regular credit cards often have very little difference as they work in the same way. It’s best to research different student credit cards and regular credit cards to see which one has the best benefits and lowest interest rates to work out which will be best for you.

Managing credit card spending and repayments

So, how do you use a credit card responsibly?

Only buy what you can afford– just because your limit is £1000, it doesn’t mean you have £1000 to spend. Only use your credit card for small purchases to get you by until your next student loan instalment or payday.

Pay your balance in full– try and pay off your balance in full or as close to full each month, so that your debt doesn’t build up. The more you pay off, the less interest you’ll build up so try not to be tempted by just paying the minimum each month.

Don’t forget your payment date– missing a payment date can have serious consequences and stays on record, so set up a direct debit to pay your balance each month but make sure you’ve got enough in your standard bank account to cover it.

Don’t go near the limit– as a rule, try to never go over 30% of your limit as this can impact your credit score.

What happens to a student credit card after you graduate?

You’ll still be able to use your student credit card when you’re no longer a student, but you might also be eligible for a regular credit card instead. Regular credit cards tend to have lower APR, higher limits and better benefits and perks, so once you’ve graduated you will probably want to take out a new credit card. But first, you’ll need to have completely paid off all your outstanding balances on your student credit card before you close your account and open a new one.

Credit card jargon

Credit cards can be confusing if you’ve never had one before. Here’s some of the jargon you’re probably going to come across if you’re applying for one:

APR– Annual percentage rate is the rate you’ll be charged on your credit card balance over a year, taking into account interest, fees and how often you make repayments.

Balance transfer– this is transferring the balance from one credit card onto another one. This can be helpful for people who have credit card debt as when transferring to a new credit card you may get an introductory 0% interest offer, so you won’t accumulate any more interest on your balance.

Cashback– a benefit offered by many credit card companies that will allow you to earn back money every time you use your credit card in certain shops.

Credit limit– this is the maximum amount of money you’re allowed to borrow.

Minimum payment– this is the minimum amount you’ll need to pay back each month, which is normally a fraction of your balance. If you only pay off the minimum each month, your debt will add up so it’s important to try and pay off as much as you can monthly.

How to improve credit history

One of the best ways to improve your credit history is to get a credit card! Many students will often have a low credit score because they’ve never had any experience with credit before, so having a credit card is a good way to change this. If you use a credit card responsibly, it shows lenders that you’re responsible with your money and it can actually boost your score.

Other ways to improve your credit history is to make sure that you’re on the electoral roll, have bank accounts that have been opened for a while (so, not changing your bank account regularly) and not applying for credit too often, as every time you do apply for a credit card or loan it will show up on your credit file. Too many applications can be a red flag to lenders, so make sure that if you do apply for a credit card, you just apply for the one rather than applying for multiple and seeing if you’ll be accepted.

For more money advice check out the average student budget per month and how to manage your money and make it go further.

Are student credit cards good?

Yes, student credit cards can be a good way to make your money stretch and to be able to afford the costs of university. All credit cards have both negatives and positives, and while a credit card might be essential to some students, many manage to get by just fine without having one.

How to get a credit card as a student?

If you are interested in getting a credit card as a student you can apply directly on the credit card company’s website. Once you’ve compared credit cards and found one that you think will be good for you, you can make an application and wait and see what the outcome is, which will normally be decided pretty quickly. If you get declined for a credit card as a student, it’s best to work on building your credit score first and try again a bit later on once you’ve built a better score.

What’s a good APR for a credit card?

A good APR for a credit card tends to be around 10% or less.