Compare Our Top-Rated Student Credit Cards

What is a student credit card?

A student credit card is a card that’s been specifically created to fit the needs of students — and the risks of lending to students. Students tend to have little or no credit history, which makes it harder for them to get approved for a credit card or other loans. Because of this, student credit cards are more likely to approve a student with little or no credit history.

Student credit cards also tend to have lower credit limits to mitigate the risks for the banks offering them. This way,  a student doesn’t rack up a large debt that they could never cover. But it’s also a protection for the student, since it’s no good for them to be saddled with big credit card debts.

Used properly, a credit card can be a great financial tool for a student. It can also help build a credit profile to allow access to other credit cards and loans in the future.  It can also provide an easy way to make transactions and be a convenient way to cover a short-term shortfall. And it can also help the student learn how to properly budget and get used to using a credit card responsibly.

How we picked the student credit card winners

We’re here to help you make the most of your money and sidestep any financial obstacles in your way. As we review credit cards, we keep this in mind and look for cards that offer the best combination of as many benefits as possible. Specifically, our ratings reflect:

• Likelihood of acceptance – A list of great credit cards is of no use to you if you’re unlikely to be approved for any of them. If you know that you already have a great credit score, you may want to consider our full list of the best credit cards. However, as most students don’t have much, if any, credit history, we focused on those cards that are more likely to accept your application.
• Annual Fees – When there’s an annual fee, it comes directly out of your pocket. If there are extra features in exchange for that fee, great. Otherwise, our favourite annual fee is £0.
• Representative APRs – You won’t necessarily get offered the representative APR when you apply (issuers only have to provide that to 51% of applicants). But we prefer cards that offer a lower standard APR. A lower interest rate means lower cost to you if you end up carrying a balance.
• Rewards and sign-up bonuses – You won’t find a rich array of rewards, cashback or sign-up bonuses for cards aimed at students or people with low credit. But a few do, so we awarded extra points for those nice add-ons.
• No foreign transaction fees – Student life can be richer (and more fun) by having the chance to travel abroad. Unfortunately, most credit card companies charge fees of up to 3% for using your card to pay for purchases in a currency other than sterling. We like to compare student cards that waive this fee and make it easier and cheaper for you to pay while abroad.
• Tools and credit-card features– Whether it’s apps to help you track your spending, access to your credit report, or access to travel or entertainment discounts, we gave extra points for cards that up their game with extra features.

Challenges of gaining credit as a student

Given that students may not have any history of borrowing, this means they are likely to have a low credit score… or none at all. This presents an obvious challenge for getting access to credit. Most students are in their teens or early 20s and often go to university straight from high school. They may be studying full time, and not in paid employment, or else they may only work a few casual hours when time permits.

Lenders such as banks and credit card providers use a person’s credit score to work out whether they want that individual as a customer or not. Having no credit history or a low credit score means you may not be offered a card, or may only be offered one with a dizzingly high rate of interest.

Making matters worse, it can hurt your credit each time you apply for a credit card and are rejected. That can make it incrementally harder to get approved for the next card you apply for. So it pays off to do a little research ahead of time to identify not only a card that meets your needs, but is likely to accept you.

About student credit cards

Credit cards for university students generally don’t differ very much from each other. They typically require less income or credit history than traditional credit cards, and the student usually needs to already have a current account with the financial institution that offers the card, or open a new one when they apply for the card. Student credit cards usually have a low credit limit so that the user can’t get into too much debt. Typically, this limit will be between £250 and £1,000.

Most student credit cards have APRs that are middle of the road. This is a positive, since cards that people with low (or no) credit scores qualify for typically have very high rates. That said, you may end up with a higher rate if you are deemed a higher risk as a first time borrower. To give yourself the best possible chance to get the representative APR it is important to show responsible financial behaviour before applying for a credit card. (For reference, the annual percentage rate (APR) is the interest charged for carrying a balance on a credit card.)

One benefit of using a student credit card is that it offers the user the ability to build a banking relationship and start to build their credit rating. While student credit cards don’t typically offer the best rewards or the highest credit limits, they can be upgraded to better cards at a later time when your credit score is higher.

How to pick your student credit card

Most of the student credit cards that we looked at are quite similar. Here are a few points to consider when comparing and choosing the right student card for you.

No annual fees – Most have no annual fees. This is also why there are limited extra features (cashback offers, balance transfers etc) offered for student cards. If the card does have an annual fee, check what extra features are available to ensure it is worthwhile.

Competitive APR – Check that the representative APR is competitive with the other cards. As you will most likely have little to no credit history, some financial institutions could offer you higher than the representative APR.

Credit Limit – Most student cards have a limit of between £250 and £1,000. And remember, just because a lender offers a higher limit straight away, doesn’t mean you should take it.

Overseas Travel – Does the card allow you to use it overseas without charging excessive fees? If you do travel, check out the fees that come with it. A 3% fee (or 2.99%) is a fairly typical non-sterling transaction fee. Of course, we prefer cards that waive that fee entirely.

Future ambitions – If you have ambitions of working internationally, it may be wise to use a financial institution that has international branches. This way, you will have a history with this lender and it will most likely make it easier when opening accounts or applying for products wherever you move to.

Current institution – Most student credit cards require you to have a current account with the lender for a minimum of three months before you can apply for the student card. If your current lender offers a student credit card, still compare it to rival lenders to see how it stacks up, but you may be able to access a credit card quicker if you stay with your current institution.

How can students build their credit profile?

Building a credit profile is an important step into adulthood. Your profile will be checked any time that you apply for credit, a loan or even for a mobile phone contract. It helps to have a solid credit score so that when the time comes that you need to borrow, lenders will see you as a worthy credit risk. When you use credit cards responsibly and pay your bills on time, that good behaviour gets reported to the credit rating agencies and can help increase your credit score.

Here are some tips that can help you to get a better credit score as quickly as possible:

Open a credit card account – One of the main differences between a credit card and other kinds of loans, is that credit cards don’t have an end date. So, while your student loan or car loan history will eventually fall off your credit report when the loans are paid off, a credit card you open in university can remain open for the rest of your life, ideally helping you establish a long and reliable credit history.

Manage your limit wisely – If you start with a lower limit on your credit card, you pose a lower risk to the lender. You may be eligible for a higher limit, but that doesn’t mean you should take it. Not being able to make the payments on a higher limit card will reflect badly when you are trying to build your score. The same applies if you immediately max out the limit when you get the card. This type of behaviour is seen as irresponsible by the lenders and may impact on potential better offers in the future.

Pay on time – Payment history is the most important factor that goes into your credit score. So, make sure to always pay your bills (not just your credit card bill) on time, and in full. Paying on time will help you avoid negative marks on your credit score as well as avoid any late fees on your next statement. Repayment in full each month will enable you to get all the rewards and benefits of having a credit card without the downside of paying interest. It will also prove to lenders that you’re reliable when it comes to paying back debt. At the very least, pay off the minimum amount due, so that you don’t default on your payments, as this will have a negative impact on your credit score.

Beware of joint bills – University can be a time at which you move out of the family home, live with different people and encounter new experiences. But, be careful of having some of the household bills in joint names as this can be a double-edged sword. Sure, it’s a great way to help build your credit profile, but just be aware that any late payments, defaults or non-payments will also affect your credit rating even if you have paid your share on time. Make sure you are all on the same page and committed to making payments, as it usually takes about six years for defaults/non-payments to drop off your credit profile. There would be nothing worse than a bill that your university roommate forgot about coming back to haunt you when you’re applying for a personal loan later in life.

Keeping these four things in mind can help you build your credit score as quickly as possible, and may eventually get you access to financial products with even better terms and features.

Bottom line: Should you get a student credit card?

Credit cards can be an effective tool if used wisely. As discussed above, there are some great benefits from using the student credit card to build a credit profile. But, if used recklessly, credit cards can harm your credit score and are a sure-fire way to rack up a big pile of debt.

Before taking out a student credit card, make sure you can make it work for you. Use the points below as a mental checklist to satisfy yourself that you can handle a student credit card correctly.

Can you use a credit card responsibly? – For some people, having a credit card just burns a hole in their pocket. The urge to spend can be irresistible. With access to borrowed money, combined with a high interest rate, it could lead very quickly to a debt that is tough to pay back. If you’re thinking about taking out a student credit card, be sure that you can trust yourself to stay on track and within reasonable spending limits.

Do you pay your bills on time? – Given that you may not have had to pay for many, if any, bills before now (thanks Mum and Dad), do you feel that you will have the discipline to pay the balance off at the end of each month? And not only your credit card bill, but phone, utility and, depending on where you’re living, council tax bills too. If you make it a habit of paying late, then not only will the late fees and interest start and build up, but this could have a negative impact on your credit score.

Do you have an income source? – As a student’s focus is on their studies, there might not be a lot of spare cash lying around at the end of each month. They may not be employed, may rely on their parents or student loans and grants for money, or may have a part-time job that provides a minimal income. Do a quick budget so that you are sure that you can pay back the balance, or at least the minimum payment, before applying. Don’t put your credit score at risk if you’re not sure you can stay within the limits and pay it back.

Learn more

• The 5 most common credit card mistakes
• Is your credit score important?
• When does my student loan get written off in the UK?
• Should I repay my UK student loan right now?
• How can I increase my credit score by using my credit card?

More ways to compare credit cards

Top-rated credit card picks by category

Top-rated credit card picks by issuer

The Motley Fool receives compensation from some advertisers who provide products and services that may be covered by our editorial team. It’s one way we make money. But know that our editorial integrity and transparency matters most and our ratings aren’t influenced by compensation. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. The Motley Fool has recommended shares in Lloyds, Tesco and Barclays.