Student Credit Card Offers

Are you 18 years old, a student or young adult looking for an ideal first credit card? If so, you need to compare the market for a student credit card that will allow you to responsibly build a credit rating, spend within a reasonable credit limit, protect your identity and give you access to internet banking. These credit card features are in addition to offering you the competitive low interest rates (APR) and annual fees that you need.

What You Need to Know About Student Credit Cards

Student credit cards are designed for Australian students to use during their studies, helping finance the costs of student life such as everyday groceries, textbooks, study materials and other expenses. This is likely to be the first time that you take control of your personal finances, and also a time when you may be surviving on a tight budget, so managing your money in the correct way is extremely important. Before comparing student credit cards it is essential to understand how they function and all the different features you need to consider in finding the cheapest deal.

Before you start it is crucial to know the basics of how they work and what your responsibilities are. When you use a credit card for purchases you are effectively borrowing money from the bank to cover the payment. You receive a monthly statement, listing all the transactions made on your card, the total balance you owe, a minimum payment required and a due date. You have the option to pay the minimum or more, or all, of the balance by this date. Any outstanding balance on your account starts attracting interest – this is how the banks make their money. If you miss payments you can face penalties, increased interest rates or the cancellation of your account.

You should note that the interest rate advertised is usually the purchase rate – the interest applied to normal credit card purchases. Other types of transactions, such as cash advances, attract different rates, often higher, and start accruing interest from the date the transaction is made.

There are a number of key features that you should look at when comparing deals. This type of card usually has a low credit limit, so that you can avoid getting into too much debt. You should look for one with a low interest rate on purchases and a low or no annual fee, to keep the costs of using your card to a minimum. If you have an existing credit card debt, you may like to consider a card with the option for a low rate balance transfer, allowing you to move the debt to your new card and repay it with less interest. While student credit cards tend to be basic products with no extra features, you should check out what else is included in the deal, and all the terms and conditions to see what other fees, rates and restrictions apply.

When you are looking for a student credit card you also need to check that you meet all the bank’s requirements to increase you chances of getting approved. Generally, these criteria include that you are over 18 years old; an Australian citizen; enrolled in an accredited school; have a co-signer such as a parent or guardian who shares the responsibility of paying your debts; and have a savings account with the same bank.

If you want to limit your spending, you may like to consider a student debit card as an alternative. The advantage of using a debit card is that it is linked to your bank account, so you are only spending your own money and not getting into debt. Student debit cards can be used for most of the same purchases and payments as credit cards.

Four Tips on Using a Student Credit Card

Make a budget and stick to it: Budgeting is an important part of student life, even more so if you are using a credit card. Write up a monthly budget of the income you have available and all upcoming expenses, along with a record of ongoing income and outgoings to monitor your spending. When you use your card make a note of the amount and try to put this money aside in preparation for paying off the monthly statement. You can also use your account’s online facility to pay off your purchases in advance of the statement when you can afford to. You monthly budget should be quite strict in exactly what you use your credit card for, reserving it for essentials only.

Save an emergency fund: Covering monthly repayments should be your priority since any ongoing debt starts attracting interest that can quickly grow. An emergency fund is a good way of ensuring you have enough money to pay your credit card bill. You should aim to put around 10% of all income into your savings account and reserve it strictly for emergencies and to cover your credit card payments.

Use cash or a debit card: A sensible way to avoid credit card debt at university is to limit how much you use your plastic friend. When you can, use cash or a debit card for everyday payments, reserving your credit card items essential to your studies. You should leave your credit card at home in a safe place, particularly on nights out, and avoid the temptation of impulse purchases.

Get advice: It is likely that your student credit card will be your first credit card, and it is far from uncommon for students to get into debt by mismanaging their finances. Seek out advice on how to manage it from family and friends, online guides, and financial advice from your school’s student services. If you think your debts are getting out of control it is always best to deal with the problem immediately before it becomes unmanageable.

Typical Student Credit Card Features

Purchase rate: This is the main interest rate that banks advertise on their credit card deals, and is applied to the part of any ongoing balance that is for purchases. Cash advances and other types of transactions often attract a higher rate than this.

Annual fee: This is a yearly charge to cover the costs of using your credit card. Many student credit cards feature no annual fee, but this may be offset with a higher interest rate, or vice versa. Make sure the deal offers real value for money before applying.

Balance transfer: This feature allows you to move a debt from an existing credit card to your new student credit card, repaying the debt with a low interest rate for an introductory period. If this is your first credit card it is unlikely to be an important consideration. If, however, you do have a debt on a previous card, you should look at how a balance transfer could save you money.

Credit limit: This is the maximum of debt you are allowed to accumulate on your account. Student credit cards usually have a lower than average credit limit. Even so, you should avoid reaching this limit and keep your balance low in order to avoid paying too much interest and building up bad debt.

Minimum payment: Your monthly statement features a minimum required payment, the lowest amount of your balance that you are allowed to pay. While you should always aim to pay the monthly balance in full, it is essential that you at least meet the minimum payment. Insufficient or missed payments can result in penalty charges and higher interest rates, and may result in your account being restricted.