Does my student loan count as income?

Yes, student credit card providers will usually count your student loan as well as your salary from your job if you have one.

Do I have to have the same student credit card as my current account?

Some banks will only offer a student credit card to people who have a student current account with them - however, that doesn't mean you have to take one out. Other providers offer credit cards to anyone who qualifies, no matter who they bank with.

How do I get my first card?

You’ll need to be at least 18 years old and ideally in good financial shape to get your first card. Here is how to find a card that’s more likely to accept you.

What happens to your student credit card once you graduate?

When you graduate and leave your course, you will still usually be able to use your student credit card. However, if you have managed your credit well, you might now qualify for a credit card that offers better benefits such as cashback or interest-free purchases, or a higher credit limit or lower APR. So, it could be worth switching to a more competitive deal.

What is a credit limit?

A credit limit is the maximum you can owe on your card at any point. It’s set by your provider when you apply. Here is how a credit limit works and how much it costs if you exceed it.

Does my credit record matter?

Yes, your credit record does matter as it helps lenders decide whether to accept you as well as what APR and credit limit to offer.

Can I use a balance transfer?

Most student credit cards don’t offer balance transfer options. These cards offer 0% balance transfers but you may not be accepted for them if you have limited borrowing history.

Are my purchases protected?

Yes. Credit card providers may offer their own protection services as well as protection through Section 75 and the Chargeback scheme.

How should I repay my credit card?

Paying the full amount by Direct Debit means you never miss a payment or pay interest. Here are the best ways to repay.

The total figure outstanding on your account at any given time. It combines your borrowing — used for purchases or transfers — with any account fees or interest charges. If this amount is not paid off in full, it is carried over as debt.

Withdrawing funds from an ATM using your credit card attracts a specific fee (unless you have a travel credit card that doesn't impose cash withdrawal fees at ATMs) and daily interest charged from the moment you take the money out. Be aware that providers often apply these same expensive rules to "cash-like" transactions — such as buying foreign currency, stocks, or placing bets — categorising them exactly the same as an ATM withdrawal.

Your credit limit is the amount you can borrow on your credit card at any one time. If you exceed this amount, you can be charged a fee — typically £12 — and it can leave a mark on your credit report. You won’t usually find out your credit limit until the end of an application process, although you can ask your provider to increase — or decrease — your credit limit at any time. Credit limits are set based on your credit history and your earnings. Once you've reached your credit limit, you need to make a payment to bring down your balance before you can use the card again. Find out more in our guide to credit limits.

Your credit report is your history of borrowing and paying bills over the past six years. Lenders send this information to one or more of the three credit reference agencies, which compile reports on UK residents. Before deciding whether to let someone borrow, lenders check your report from one or more of the agencies. You can request a copy of your credit reports to ensure there are no mistakes on your file, request changes if you spot one and add notes explaining any missed payments.

Your credit score is calculated based on your credit history. Each credit reference agency has its own method of calculating this. Your credit score will go up for things like making payments on time and down for things like being late or defaulting on a loan. Typically, the higher your score, the more likely you are to be offered a lower rate of interest or higher credit limit. There is no absolute pass or fail mark attached to a credit score, with each lender making its own decision on what it considers acceptable.

This occurs when the relationship between you and the lender has broken down due to unpaid debt. It typically happens after 3-6 months of missed payments. You will receive a warning letter 14 days prior; if you do not pay, the account is defaulted. This blocks you from using the card and significantly damages your credit rating for six years.

An automated payment method where you authorise a company to collect money from your bank account. It is the most common way to pay credit card bills because it ensures you never miss a due date. You can set it up to collect the minimum payment, a fixed amount, or the full balance every month.

The minimum standards you need to satisfy before a provider will consider your application. This typically involves your age, employment status, and salary. You should check these carefully before applying to avoid unnecessary rejections, though meeting them does not automatically guarantee you will get the card.

Foreign transaction fees

The extra cost added to purchases made in a foreign currency. Standard credit cards typically add a fee of around 2.75% to 2.99% to the exchange rate set by Visa, Mastercard, or Amex. Some specialist travel credit cards waive these fees, though you should still avoid withdrawing cash as this usually attracts interest immediately.

If you’ve made an application for credit, such as a credit card, loan or mortgage, lenders will carry out an in-depth check of your credit report, known as a hard credit check. This is a detailed look into your financial history, especially your borrowing history, so a lender can see your track record of repaying money you've previously borrowed. A hard check will show any negative marks on your credit report, like overdue payments, missed payments, previous credit applications and even bankruptcies. Every time a hard check is carried out, it leaves a mark on your credit report, which can hurt your credit score.

Interest-free credit cards allow you to either transfer a balance, make purchases or transfer cash to a current account without paying any interest on your balance for a set period. However, you must keep making at least the minimum monthly repayment during this time. Once the 0% deal is over, you will be charged interest on any remaining debt at your standard APR. With balance transfers and money transfers, you will usually have to pay a transfer fee.

Credit card introductory offers include bonus reward points, extra cashback, 0% on balance transfers or 0% on purchases. Introductory offers are used to attract new customers, but once they expire, they revert to the standard offer or rate. When this happens, you should check if you’re still getting the best deal or whether you need to switch to a different credit card.

Minimum monthly repayment

This is the smallest sum accepted by your provider to keep your account active without penalties. It is calculated based on a small percentage of your total balance (or a fixed sum like £5 if the balance is low). While paying the minimum stops you from defaulting, it does not clear your debt efficiently. We recommend paying as much as you can afford to minimise interest costs.

A soft credit check is a top-level view of your financial history. It lets lenders assess you for their offers and can show you what you could be eligible for. Although a soft credit check is recorded, it doesn’t leave a mark on your credit file. This means that while you can see soft checks when you look at your own report, lenders can't. A soft credit check won’t impact your credit score, but you’ll be able to see if anyone has checked your credit history. In certain industries, some employers will perform a soft credit check if you’ve recently applied for a job with them.

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Student credit cards

Compare our best credit cards for students

Get extra protection with a student credit card

Student credit cards can help you cover unexpected expenses and build a credit history while you’re at uni. Here’s how they work.

money.co.uk is a credit broker, not a lender, for consumer credit. Our services are provided at no cost to you. We may receive a commission from the companies we refer you to, but this does not affect what you will pay for the product you choose.

What is a student credit card?How they work Student Cards vs Overdrafts Limitations Finding the best card Eligibility Eligibility tools Expert tips Debt and advice FAQs Jargon buster

What is a student credit card?

A student credit card is specifically designed for individuals enrolled in a UK university with limited or no income.

As a student, managing finances can often be challenging, and a student credit card can provide flexibility during times when cash is tight. Not only can they help you manage your day-to-day expenses, but they also offer a valuable opportunity to build your credit history – something that's crucial when it comes to major future borrowing, such as applying for a mortgage.

Typically, student credit cards come with lower credit limits and higher interest rates. For this reason, they are best suited for covering everyday purchases, as long as the balance is paid off in full each month to avoid unnecessary interest charges.

When used responsibly, student credit cards can be a helpful financial tool. In addition to providing extra protection on your purchases, they can offer rewards like cashback or loyalty points.

How do student credit cards work?

If you’re thinking of applying for a student credit card, here’s how the process works:

Apply for your student credit card: You can often do this through an online form on the provider’s website, and will need to supply a few personal details.
Get approval and receive your card: Once you’re approved, your credit card should arrive within the next week or two and you’ll then need to activate it.
Spend on your credit card: Once activated, you can use your credit card to make purchases, but be sure to stay within your credit limit.
Pay off your balance each month: You must make at least the minimum monthly repayment, but aim to pay off the whole balance to avoid paying interest.

Student credit cards vs overdrafts

Student credit cards differ from an overdraft or buying something with a buy-now-pay-later service like Klarna or Clearpay. Here are the benefits of a student credit card:

Purchase protection

Consumer credit laws mean that if you buy something on your credit card worth more than £100 and up to £30,000, the card provider provides protection.

If there's a problem with your purchase, and the seller lets you down, you can get a refund from your credit card provider instead.

You don't need to buy the whole item with your card - even if you just pay £1 of the price using your credit card, you can claim the full amount back if there’s a problem (assuming the full purchase price is over £100 and no more than £30,000).

Interest-free period

Another benefit of using a credit card is that no interest is charged on your purchases for up to 56 days.

However, be aware that if you don’t clear your credit card balance in full each month, rates of from around 20% a year (and usually upwards of 30%) are applied to the remaining debt.

Boost your credit score

Credit cards can also help you improve your credit score, provided you use them sensibly. You can do this by ensuring you don’t exceed your credit limit and repaying your credit card balance in full and on time.

Lenders, landlords and even some employers check your credit history to work out how responsible you are with cash before making you an offer, so any evidence of this will work to your advantage. Building up good credit can also help you get better deals on mortgages and loans in the future.

Limitations of a student credit card

As well as the benefits, there are also a number of downsides. These include:

Lower credit limits

Credit cards for students might offer lower credit limits compared to standard cards, so you might not be able to spend quite as much as you were hoping. But on the plus side, this can prevent you from building up too much debt.

Higher interest rates

Your student credit card might also have a higher interest rate compared to a standard card. This means you’ll pay more if you can’t afford to clear your balance each month.

Fees

If you miss repayments, you’ll be charged a fee, and it can also have a negative impact on your credit rating. There might also be fees for using your credit card abroad and withdrawing cash.

Finding the best student credit card for you

The best student credit card will depend on what you're planning to use it for.

That's because while all cards have some things in common, such as extra purchase protection, their other features vary wildly.

If you want the lowest interest rate on your credit card, for example, you might find the best deal with your student current account provider.

But if you want to spread the cost of purchases interest free, you'll need to compare cards to see what is on offer elsewhere.

Other perks could also work well for you. If you have a good credit rating, there are cards out there that offer free use overseas and air miles, as well as discounts and cashback.

How providers assess your eligibility for a student credit card

To be eligible for a student credit card, you need to:

Be at least 18 years old
Be a UK resident
Be enrolled in a course at a UK university

When considering your application for a credit card, providers need to decide two things:

Your credit limit - the maximum amount they will let you borrow
The APR - the interest rate they will charge on your borrowing, plus any fees

For this, they consider three factors:

Your income. As a student, you might not have a job, and your income could be low. However, providers may require you to have a regular income. They also commonly factor in your student loans as part of it.

Your credit score. Being a student, you’re not likely to have much of a credit history, so providers don’t have much to go on when judging how responsible you are with debt. This is why providers lower their risk by offering lower credit limits for student credit cards.
Existing debt. As a student, you may not have any existing debt other than student loans. However, if you’ve had a current account for a few years and have never used your overdraft, this could work in your favour.

Expert student credit card tips

Automate it: By setting up a Direct Debit from your current account to clear the balance of your card each month, you will never miss a payment
Cash costs more: Withdrawing cash on your card from an ATM, known as a cash advance, should be avoided as you’ll be charged high fees and high interest
Use it for your deposit: As long as your purchase costs more than £100 and up to £30,000, you get full purchase protection no matter how much of the purchase price is paid on a credit card. So using it to cover the deposit of a holiday covers you for the entire trip.

Little and often to boost scores: If your goal is to build your credit rating, the best thing you can do is to make regular, small purchases and repay the balance in full each month.
Check twice, apply once: Every formal credit application is recorded and shared with other lenders. Making lots of applications in a short time can make you look desperate for money and actively hurts your chances of being accepted. When you use an eligibility tool, however, your search won’t be shared with anyone, and you’ll be able to see how likely you are to be accepted before you apply.

How to manage your cash effectively as a student

When you’re a student, you’re likely to be relying on student loans and any extra cash you can earn from a part-time job. But that money only goes so far.

For this reason, it’s easy to get tempted by credit products such as student overdrafts and credit cards and rely on them to get by. But doing so can mean your debt can quickly spiral out of control.

Here are a few things you can do to avoid getting into debt:

Make a budget to understand how much you have left over each month once you've covered your living expenses
If you’re spending more than you have coming in, look for areas where you can cut back rather than using your overdraft or credit card to fill the gap
Carry out regular price comparisons for bills such as your mobile phone and broadband
Take advantage of student discounts

How does an eligibility checker work?

As a student, it’s important to use eligibility tools because you’re probably looking for your first credit card and may be unsure which card to apply for.

Eligibility tools will match you with the credit cards you're likely to get based on your circumstances as a student.

It uses a “soft search” credit check so your credit score will not be affected, and it saves you from applying for credit cards you can’t get. As a result, you’re less likely to end up with a rejected application.

This is important because you should wait at least three months to apply again after being rejected because multiple applications in quick succession can hurt your credit history.

Being a student, you’re already building your credit history from scratch, so a negative mark on your credit report from the start would be a significant setback. It’s best to avoid that at all costs.

Student credit cards FAQs

Student credit cards jargon buster

About the author

Lucinda O'Brien

Lucinda O'Brien has spent the past 10 years writing and editing content for regional and national titles. She applies her industry knowledge to ensure readers can make confident financial decisions.

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