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Can Students Get A Credit Card
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Can Students Get A Credit Card

Written by Sam | June 1, 2020

Well, first a credit card is where a bank or whoever issues the credit card lends you money and then expects you to pay it back. If you don;t pay it back within a certain time frame, you will pay extra, which is how they make their money.

The Difference Between a Student Credit Card and Normal Credit Card

Standard Credit Card

To get a normal credit card they expect you to have a regular income and a credit rating and with this, you can borrow higher amounts at lower levels of interest!

Student Credit Card

A student credit card means that you don’t need to have a regular income, you won’t be able to borrow as much and you’re interest will be much higher! I saw one today for 33%

Why Have a Student Credit Card

So for me, there are only a handful of reasons why you would want a student credit card, we recommend you get a student bank account. Why student credit cards are used:

  • Credit Rating- By having a credit card, you can get a credit rating
  • Safety on Purchases – You hear lots of people claiming money back from their credit card company when something has gone wrong, this is true because of Section 75 Protection
  • Cashback and Rewards – You can claim some rewards which are meant to entice you in!

The Difference Between a Student Credit Card & Bank Account

A student bank account will give you a FREE overdraft of a certain limit. By free they mean no interest, you still have to pay the money you borrow back by a certain point.

A credit card company has it’s own pluses, but they will charge if you don’t pay back what you have spent and this is one of the fastest ways of getting in to serious debt, especially with student credit cards where the interest is seriously high!

Is a Credit Card The Right Thing For You?

Credit cards can be really handy when you use them effectively and understand teh workings of them, they can protect your when making big payments and you can earn plenty of bonuses if you spend enough!

However, those who fall on the wrong side of them can end up in a lot of debt, very quickly and it is very tricky to get out of. It can also take you a very long time because of the interest that you incur on the money you owe.

How you know a credit card is the right tool for you:

  • Good with money, not in your overdraft
  • Understand the risks
  • Can budget monthly amounts and will have money at the end of each month to pay it off
  • Understands interest repayments

Tips For When You Have a Student Credit

  • Don’t just use it as a standard bank card – Keep track of everything you spend on here as you will need to pay it off
  • Always pay in full each month & if you can’t pay off as much as you can to reduce the interest you owe on the amount. You can set up a direct debit where it will take that amount directly out of your bank account so you don’t have to think about it.
  • Try and keep the credit card for the bigger payments and protect yourself in case something like a pandemic happening and you need or want your money back. You still want to be able to pay this off in full when it comes to it and requires saving in your Student Bank Account first.
  • If you are using it for the cashback and rewards, you can do your monthly spending on your credit card and then link back to your direct debit monthly payment to make sure it is cleared each month. You could even pay off your termly accommodation off if that counts.
  • Don’t withdraw cash, it has big fees
  • Don’t go over your limit – They will penalise this for you massively
  • Don’t be fooled by their introductory rate.

Student Credit Card Definitions

0% introductory rate

During the initial introductory period after taking out the card, you won’t be charged interest on the outstanding balance. It’s possible you’ll be required to make a minimum payment each month.

Interest

This is a percentage calculation of your outstanding balance per year which is typically charged monthly.

For example, 100% interest on a £100 debt means after 12 months interest rates would reach £100 – if the debt isn’t repaid and you weren’t charged for non-repayment. With each monthly repayment your debt reduces which in turn reduces the total you’re charged on interest – 100% of £50 is less than 100% of £100.

Limit

This is the most you’re allowed to borrow from your credit card provider which is shown on your statement. This limit will depend on your credit score.

Outstanding balance

The current amount of money you’re borrowing from the credit card provider, shown on the statement. Interest is normally charged on this each month.

Representative APR

This is simply the estimated cost of borrowing money (interest + fees). If you had 100% APR on a 1 year loan, you’d be expected to repay £200 by the end of the year.

Balance transfer

If you have an outstanding balance on a credit card or loan, a balance transfer card lets you put your debt on a special type of credit card. Even with 0% interest offers, you’ll likely be charged a fee for transferring.

Helpful Reading

https://youtu.be/sa9UT8C1YW0

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