So you’ve started uni, struck out on your own and embraced adulthood. Great! But how are you going to pay for all that newfound freedom? When you’ve got costs like rent, textbooks, travel to and from uni and study supplies to cover, your budget can stretch pretty thin pretty fast.
A student credit card might just be the answer to your problems - but only if you’ve got the financial know-how to use it properly. We’ve rounded up the most important things you need to know about having a credit card as a student here. Check it out:
What credit cards are available for students?
Some banks (particularly the big banks) offer credit cards aimed directly at students. These cards have a few defining characteristics, such as:
Waived annual fees. One of the big perks of being a student is that businesses everywhere are willing to waive fees for you. Banks are no different, and as long as you’re enrolled to study full time, you can often snag an annual fee free credit card by flashing your student card in branch.
Low rates. Banks know that students aren’t necessarily the most cashed up bunch. So what good would a student card be if it didn’t come with an affordable interest rate attached?
Low credit limits. The flip side of that, is that a bank generally won’t want to give you a sky high credit limit, in case you bite off more than you can chew. Student cards are all about baby steps.
While these cards can be a great starting off point, don’t think that they’re your only option. There are heaps of credit cards that have all the features you need that don’t have “student” in their name.
What features should I look for?
So if you’re interested in a credit card beyond the ones marketed specifically to students, what is it you’re looking for? It might seem like there are way too many options to ever find the perfect plastic. But to narrow them down, it’s important to know just what features are going to work for you.
Here are some to consider:
Low fee. Although some banks waive fees on student cards, that’s not necessarily the case for other credit card options and you’ll need to take responsibility for finding a card that comes with low or no annual fees. The good news is that this way, you can keep the same card after graduation without anything changing.
Low interest rate. There are lots of cards that come with rock bottom interest rates attached to help keep your bills under control. Use your card responsibly and you don’t ever have to pay interest - but a low rate is handy in case you miss a due date or are a bit skint some months.
Killer introductory offers. Keep an eye out for introductory credit card offers, which usually come in the form of no annual fee for the first year, or a 0% interest period. These are especially good if you’re just using this card as a jumping off point to apply for something a bit more heavy duty - once the intro offer runs out, cancel the card and move onto a piece of plastic with more rewards or a higher credit limit.
Contactless options. Tap ‘n’ Go is just so easy, isn’t it? Contactless payments are the way of the future, so make sure your credit card gives you the option to tap for small purchases.
Online banking option. Chances are, you manage everything - from your bank account to ordering take out - on your phone, right? So make sure your card can be linked to your online banking app so that paying your bill or checking your statement is a breeze.
Applying for a credit card as a student
Once you’ve picked a card, the next step is to apply. General credit card eligibility criteria - like having a regular income and being over 18 - will apply, but there are also some conditions unique to applying as a student, including:
You must be enrolled fulltime in tertiary education. This is only really important if you’re after a specifically student aimed card, or trying to snag a student discount. If you’re a part time student, you may have to consider a low rate card not targeted to students instead.
You earn a minimum income. Some credit cards will require you to earn a minimum income to apply. When you’re a student, you can often count things like Austudy or Youth Allowance toward your income.
If you’re an international student, you may need a minimum amount of time left on your student visa, and be able to demonstrate that you have some money in an Aussie bank account.
What if I have no credit history?
One of the things credit card providers look at when you apply is your credit history - it tells them if you’re a responsible borrower.
As a student, you probably don’t have much of a credit history, since you’re likely applying for a credit card for the first time. But that’s ok, because these cards are designed as a starting point.
Providers won’t worry too much about your lack of credit history when you apply for a student credit card - instead, focus on things like being able to show you save regularly and manage a budget properly.
Building a credit history with a student credit card
The really great thing about a student card is that you can use it as a way to build up a good credit history. That way, you’ll be in a good position to be approved for other cards later on.
But it can also cause trouble if you get a bit spend-happy and misuse your card, winding up with a negative credit history. To ensure you’re making a good impression and building a reputation as a reliable borrower, you need to spend responsibly.
Here are some basic rules to stick to:
Why use a credit card?
As we said above, using a credit card to start building a credit history is a great reason to carry one of these pieces of plastic. But it’s not the only reason - here are some other perks of carrying a credit card as a student:
Buy now, pay later. Are textbooks stretching your already thin budget? When you’ve got big one-off costs like that, the option to buy them when you need them and pay them off gradually can be a great tool. Just make sure you pay them off as quick as possible (preferably in the same month) so you’re not getting hammered by interest.
Credit card rewards. Although low rate cards are often a bit light on the rewards front, earning points toward freebies like flights, event tickets and retail products can be a big bonus of using a credit card. A free flight home for Christmas or a new sandwich toaster wouldn’t go astray, huh?
Security. Credit cards usually come with their own security systems in place, including a zero liability policy. So if someone gets your card details, or if there’s a problem with something you buy or a payment you make (especially when shopping online) these security measures can mean that you won’t get stuck paying for a silly mistake.
Track your expenses to set a budget. Keeping track of expenses can be difficult and time-consuming. But if you’re doing most of your spending on a credit card, you can use your statements as a way to track expenses and plan a budget from there. It will be easy to see where and what you’re spending on - and where you might be able to spend less!
What can go wrong using a credit card?
You might be nervous about carrying a credit card, especially if this is your first brush with borrowing money. There are two big things that can go wrong with this plastic in your wallet:
Debt is the number one concern when using a credit card - it affects your credit score, can follow you for years and it’s all too easy to fall into. Here are some of the mistakes you might make that will lead to being snowed under by credit card debt:
Ignoring interest free days. Interest free days will allow you to use your credit card interest free, as long as you use them properly. This means knowing when they begin and end, and planning your purchases so that big ticket items can be bought at the start of your statement cycle. That way, you’ll have the maximum number of days to pay the balance before being hit with interest.
Letting fees pile up. So you might have missed a payment or two and been hit with a late fee. No big deal, right? Well, the longer you leave these fees sitting on your account, the more damage they’ll do to your savings stash. To avoid getting hit with late fees all together, think about setting up direct debits to cover at least the minimum payment each month, if not the whole balance.
Only paying the minimum. It’s tempting to just pay the minimum amount needed to avoid a late fee, but this is a trap! Unless you pay off your whole balance, you’ll be charged interest, plus you’ll lose your interest free days for the next month. You should always try to make the minimum payment, but it’s even better to pay your bill in full.
Spending more than you can afford. With all this money at your fingertips, you might get a little carried away and wind up splurging more than you should. Try to avoid overspending just because you can - remember that while a credit card means you can spend money you don’t have right now, eventually, you will have to pay it all off.
Credit card fraud
Credit card fraud is always a concern despite good safety measures put in place by providers. Here are some tips on how to protect yourself from becoming a victim:
Shop securely online. Do you know what a secure website looks like? When shopping online, look for the padlock on the left end of the address bar as below, which lets you know a site has security measures in place to protect your details. Try to stick to online shops you know and trust, or that have a good reputation.
Keep your card details and PIN confidential. Don’t tell anyone your PIN - not your mother, your brother or your friends! Keep it private, make it hard to guess and don’t write it down anywhere if you can avoid it.
Review your statements. Get into the habit of looking through your monthly statements and keep an eye out for any unusual activity. If you see a transaction that looks odd or that you don’t remember making, let your credit card provider know straight away. If you take action ASAP, you can avoid being liable for paying fraudulent charges.
Report and cancel lost cards immediately. Misplace your card or have your bag stolen? Cancel your credit card as soon as you know it’s gone. That way, someone else can’t pick it up and start using it. Some providers also offer a “hold” feature, which will let you temporarily freeze your card if you think you might find it again, so if you don’t want to have to cancel you card, check for an option like this.