A guide to student credit cards

Are you a student considering taking out a credit card? We’ve put together a few tips to get you started in your research.

Full-time study often only allows a limited amount of time for paid work for many students. So what are your options for increasing your cash flow when you need it? For people on top of their spending habits, a student credit card could be a viable option. 

What is a student credit card?

Many students don’t have a credit history or consistent employment, making it difficult to successfully apply for standard credit cards. Identifying this, some banks offer credit cards for students, typically with low spending limits and no annual fee, at least for the first year.

The no annual fee can sometimes last longer than the first year if a certain spend threshold is reached or valid student card is displayed.

In general, applicants must be Australian citizens, aged over 18 and often a co-signer such as a guardian is required as security for the credit provider.

Should I get a student credit card?

Before you sign up to a new credit card, do your research, run your calculations and evaluate if there is an alternative.

If you haven’t got one already, it could be good idea to get a debit card before plunging into the world of credit, as this gives you an idea of the ways you can use a credit card without the risk of falling into debt. A debit card functions in all the same ways as a credit card, but is linked to your bank account, meaning you can only spend money that you have. Here’s some more info on debit versus credit cards.

Also consider a few things:

1. Is there an alternative option?

Are you planning to use your student credit card to cover important bills in between pays, or are you wanting to boost your holiday spending? Carefully considering what you will be using the card for will help you to determine what product is best for you. For example, perhaps frugal budgeting or a travel card would be better suited and could end up being a cheaper option.

2. Are you wanting to develop a positive credit history?

If one of your main aims is to build a positive credit history, make sure you carefully consider the terms of the card to make sure you use it responsibly and don’t incur extra debt, as this could counteract your goal! To find out more about what can impact your credit rating, read our article about 10 ways to ruin your credit rating.

3. How much can you realistically pay off?

Look at your finances and prepare a budget to determine how much you will realistically be able to pay off within the defined time frames of the card issuers you are considering. This will help you determine the cap you want to select to ensure you don’t accidentally spend more than you can afford.

What are the pros and cons of a student credit card?

There are few financial services companies which offer a dedicated ‘student’ credit card. Most companies offer a low rate or low fee product which is well-suited to students on a budget. The number one concern for most university students is money, with features taking a back seat. Some of the pros and cons of such cards are listed below: 

Pros  Cons 
  • No annual fees, meaning your only added expense is interest payments 
  • Low interest rates, meaning you don’t pay as much as other credit cards 
  • Lack of points means there may be less of an incentive to buy items you don’t need 
  • Few features or benefits compared to more expensive cards 
  • Often no rewards program, or a less lucrative one than other cards 
  • Low interest rates may only be for a short introductory period, after which a higher rate kicks in 

How to choose a student credit card

Once you get to the point of selecting a credit card for yourself, there are several factors worth considering. Most banks have credit cards for students that are specifically tailored to the needs of tertiary students – and some offer several different options.

In general, most banks will offer two types of cards that are the best credit cards for students to use: one with a low interest rate and one with no annual fee. Ideally, it’s good to have one card that offers both! You can find more info on low rate and low fee cards here.

If you think you might be less than diligent paying off your card, the low rate card could be the better choice as this will minimise the amount of interest you end up paying. However, if you think you’d be good at staying on top of your card balance, the no-fee card could suit your needs.

Watch out for low fee cards that are too good to be true, of course.

Tips for managing your student credit card

Whatever card you decide on, it’s important you set a reasonable limit for your card based on your earlier calculations. Most student credit cards will have a minimum credit limit set, but try to set the maximum limit for your card as well. This will give you enough spending power to cover anything you realistically need on a day-to-day basis, but will hopefully be an amount you won’t struggle to pay off at the end of the month.

Once you have your card ready to use, it could be a good idea to set up a budget for the week/fortnight/month. This will stop your finances from getting out of hand and will help you manage your income and payments. It could be worth trying Canstar’s online Budget Planner Calculator.

Always be sure to check your statement regularly to ensure you are paying everything on time. It can be helpful to make early payments to keep on top of your credit card debt. Try to use your debit card or cash when paying for incidentals and use your credit card for your more regular, significant payments such as bills to avoid the debt creeping higher than anticipated. It is also a good idea to put aside money from your pay or Centrelink to help cover emergencies to reduce the strain on your credit card repayments.


So if you’re studying and considering a student credit card, there are many to choose from. It’s a matter of talking to financial institutions, your peers and checking out Canstar’s comparison of credit cards to decide which one’s right for you.

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