Living a student life means you might have to balance your work and student life - something that's far from easy.

You might not always be able to afford the things you need and want and, this is the reason that student credit cards are so helpful.

What is a credit card?

If you’re a student and are looking for ways to buy now and pay later, a credit card is the ideal solution for you but, firstly, it’s important to know what a credit card is.

Essentially it's a tool that offers a way of buying now and paying later. Simply put, credit card companies will lend you the money and you'll pay them back at a later date.

The catch is that you will pay interest on the amount owed and, it will be applied to your outstanding balance. How much you pay in interest depends on how long you take to pay them back - the sooner you repay in full the less you'll pay.

It does not have to be considered bad debt, if you manage your money properly and, do not spend more than what you can afford to repay.

So, what is a student credit card?

It's a card that caters for university, college and varsity students who do not have an income or, the credit which is needed for the approval of a regular credit card.

These usually have lower credit limits, offer fewer rewards and have higher APRs (Annual Percentage Rate). This is a great way for students to build their credit scores.

Benefits you'll enjoy

  • They can improve your credit score provided you manage them well. A good credit score is essential for buying a house or a car.
  • Use your card to buy products over £100 and Section 75 protection means that credit card companies must refund you when things go wrong.
  • It teaches you how to manage a credit card account which is a vital money management skill.
  • Student bank accounts come with rewards and cashbacks.
  • 0% interest means that you won't have to deal with fees and interest rates if you repay your balance within the specified time frames.
  • You can use it to track your expenditure.
  • It's much safer than carrying cash around.
  • Credit cards work in any currency.
  • A credit card can be used in case of an emergency.

Remember to only use a credit card if you can manage the repayments properly.

Disadvantages to be aware of

  • High interest rates make it expensive for a student, especially if you wait too long to repay.
  • Fees can be hidden.
  • The danger of debt from improper expenditure management.
  • Low credit limits mean you can't buy expensive items.
  • Will affect your credit history if used incorrectly.
  • Credit card fraud.

Best student credit cards in the UK

  • HSBC - they have an APR of 18.9% with a limit of £500. They offer online banking but, you must have an HSBC student account first.
  • NatWest - they have an APR of 18.9% with a limit of £500. They offer up to 56 days interest-free on purchases but, you must have a NatWest student current account.
  • RBS - they have an APR of 18.9% with a limit of £500. They offer online banking and up to 56 days interest-free purchases but, you must have an RBS student current account.
  • TSB - they have an APR of 19.9% with a limit of £1000. They offer mobile and online banking but, you must have a TSB student account and the APR is much higher.

Requirements to apply in the United Kingdom

  • You must live in the UK.
  • Be at least 18 years old.
  • Not hold another student credit card account with any other bank.
  • Have a UK bank account.
  • Be clear of any debt problems.
  • You are currently studying or about to start studying in a suitable course. (A suitable course means it's an undergraduate course of minimum two years in the UK. Proof of acceptance might be required.)
  • You will need you to have a regular income.

Alternatives you can try

  • Interest-free overdrafts - could be a cheaper way to borrow money.
  • Grants and student loans - these are government-issued.
  • Secondary cardholder on a parent's credit card - a card for you to use that your parents are in charge of.

Guide to credit scores

  • Very good (740-850)
  • Good (670-73)
  • Fair (580-669)
  • Poor (300-579)
  • New (No credit score)

Student credit card statistics

Card-based expenditure is expected to increase exponentially in the coming decade, with 18.2 billion debit card payments expected for 2026 – a 57% increase to what was seen 10 years before. Furthermore, 8.7 billion cash payments are forecasted to occur in 2026, which would present a 43% drop from 10 years before.

According to UK credit card statistics, from 2011 to 2017 there has been a steady increase of purchases from 2 to over 3 million. The value of these purchases range from £180 to £200 billion.

Credit card payments made up 78.4% of all national retail sales by the end of 2017, which is a record high. In the UK, over 34 million people were credit card holders based on 2018 statistics.

Some common jargon explained

To responsibly take out a student credit card, you need to understand the terms used in a contract as well as the application form.

  • 0% introductory rate - after you've just taken a card out, there is an initial period where you don't pay interest.
  • Interest - a percentage of your outstanding balance which is charged monthly, this is your interest rate.
  • Limit - the maximum amount that can be borrowed which can be found on your agreement. Your limit will depend on your credit score.
  • Outstanding balance - the current amount you have borrowed from your credit card provider.
  • Representative APR - this is just an estimated cost of borrowing money which includes interest and fees and can be used to compare credit card options.
  • Balance transfer - this allows you to transfer your debt.

To conclude, getting a student credit card is a good choice if you are able to manage it well. It can easily be done by completing a few simple steps. Now that you know how to open a student credit account you can go ahead and compare options to find the most suitable one for you.