Student Credit Cards in England: What You Need to Know
If you are a student in England, you may be wondering if you should get a credit card. A credit card can be a useful tool for managing your finances, building your credit history, and earning rewards. However, it also comes with some responsibilities and risks. Here are some things you need to know before applying for a student credit card in England.
What is a student credit card?
A student credit card is a type of credit card that is designed for students who have little or no credit history. Student credit cards usually have lower credit limits, lower interest rates, and no annual fees than regular credit cards. They may also offer some perks, such as cash back, points, or discounts on certain purchases.
How to get a student credit card?
To get a student credit card, you need to meet some eligibility criteria, such as:
- Be at least 18 years old (or 19 in some provinces)
- Be a England citizen or a permanent resident
- Be enrolled in a full-time or part-time post-secondary program at an accredited institution
- Have a valid England address and phone number
- Have a source of income or a co-signer (optional)
You also need to fill out an application form, either online or in person, and provide some personal and financial information, such as:
- Your name, date of birth, and social insurance number
- Your school name, program, and expected graduation date
- Your monthly income and expenses
- Your bank account details and credit history (if any)
The credit card issuer will then review your application and perform a credit check to determine your creditworthiness. If you are approved, you will receive your credit card in the mail within a few weeks.
How to use a student credit card?
Once you have your student credit card, you can use it to make purchases online or in stores, as well as to withdraw cash from ATMs. However, you need to be careful not to overspend or miss your payments, as this can negatively affect your credit score and incur fees and interest charges. Here are some tips on how to use your student credit card wisely:
Set a budget and track your spending. Only use your credit card for necessary and affordable expenses, and avoid impulse buying or splurging on things you don’t need. Keep track of your transactions and balances using online banking or mobile apps, and review your monthly statements carefully.
Pay your balance in full and on time. The best way to avoid interest and fees is to pay off your entire balance by the due date every month. This will also help you build a good credit history and improve your credit score. If you can’t pay the full amount, at least pay the minimum payment or more to avoid late fees and penalties.
Use your rewards wisely. If your student credit card offers rewards, such as cash back or points, make sure you use them to your advantage. Redeem your rewards for things that you need or want, such as groceries, gas, or travel. Don’t let your rewards expire or go to waste, and don’t spend more than you can afford just to earn more rewards.
Protect your credit card and personal information. To prevent fraud and identity theft, you need to safeguard your credit card and personal information. Don’t share your credit card number, PIN, or security code with anyone, and don’t lend your credit card to anyone. Report any lost or stolen cards, or any suspicious transactions, to your credit card issuer immediately. Also, check your credit report regularly for any errors or signs of fraud.
What are the benefits of a student credit card?
A student credit card can offer you several benefits, such as:
Building your credit history. By using your credit card responsibly and making your payments on time, you can establish a positive credit history and improve your credit score. This will help you qualify for better credit products, such as loans, mortgages, or car leases, in the future.
Earning rewards. Depending on your credit card, you can earn cash back, points, or discounts on certain purchases, such as groceries, gas, or entertainment. You can then use your rewards to save money or treat yourself to something nice.
Learning financial skills. Having a credit card can teach you valuable financial skills, such as budgeting, saving, and managing debt. You can also learn about interest rates, fees, and credit terms, and how they affect your finances.
Enjoying convenience and security. A credit card can make your life easier and safer, as you don’t have to carry cash or worry about losing it. You can also shop online or abroad with ease, and benefit from features such as fraud protection, purchase protection, and travel insurance.
What are the drawbacks of a student credit card?
A student credit card can also have some drawbacks, such as:
Accumulating debt. If you spend more than you can afford or pay off, you can end up with a high balance and interest charges. This can make it harder to pay off your debt and hurt your credit score. It can also affect your ability to borrow money or achieve your financial goals in the future.
Damaging your credit history. If you miss your payments, exceed your credit limit, or default on your credit card, you can damage your credit history and lower your credit score. This can make it difficult to get approved for other credit products, or result in higher interest rates and fees.
Facing fees and penalties. If you don’t follow the terms and conditions of your credit card, you can incur fees and penalties, such as late fees, over-limit fees, cash advance fees, or foreign transaction fees. These can add up quickly and increase your debt.
Falling into bad habits. If you are not careful, you can develop bad habits, such as overspending, relying on credit, or ignoring your bills. These can lead to financial stress and affect your mental and physical health.
How to choose a student credit card?
There are many student credit cards available in England, each with different features and benefits. To choose the best one for you, you need to consider your needs, preferences, and goals. Here are some factors to look at when comparing student credit cards:
Interest rate. The interest rate is the percentage of your balance that you have to pay as interest if you don’t pay it off in full by the due date. The lower the interest rate, the less interest you will pay. However, you should aim to pay your balance in full every month to avoid interest altogether.
Annual fee. The annual fee is the amount of money that you have to pay every year to use your credit card. Some student credit cards have no annual fee, while others may charge a small fee. The higher the annual fee, the more rewards or benefits you may get. However, you should weigh the fee against the value of the rewards or benefits, and make sure they are worth it.
Credit limit. The credit limit is the maximum amount of money that you can borrow on your credit card. The lower the credit limit, the less you can spend and the less debt you can accumulate. However, you should also avoid using too much of your credit limit, as this can lower your credit score. A good rule of thumb is to keep your credit utilization ratio below 30%, which means using less than 30% of your available credit.
Rewards. The rewards are the incentives that you get for using your credit card, such as cash back, points, or discounts. The more rewards you earn, the more money you can save or enjoy. However, you should also consider the redemption options, the expiry dates, and the eligibility criteria of the rewards, and make sure they suit your needs and preferences.
Perks. The perks are the extra features or benefits that you get with your credit card, such as fraud protection, purchase protection, travel insurance, or extended warranty. The more perks you get, the more convenience and security you have. However, you should also read the fine print, and understand the terms and conditions, the coverage limits, and the exclusions of the perks, and make sure they are useful and relevant to you.
What are some of the best student credit cards in England?
Based on our research and analysis, here are some of the best student credit cards in England for 2024:
- HSBC Student Credit Card
- RBS Student Credit Card
- NatWest Student Credit Card
- TSB Student Credit Card
Marbles Credit Card (suitable for individuals with poor credit histories) - Tesco Foundation Credit Card (not exclusively for students but suitable for building credit)
- Amex Platinum Cashback Card (although not explicitly marketed for students, it has been mentioned as a good starting point for building credit).
- Other notable mentions include theHSBC Student Credit Card, which offers personalized cashback through the Visa Offers program, and the Aqua Advance Student Travel Credit Card, which is beneficial for students traveling abroad without charging fees on international transactions.
Keep in mind that eligibility requirements and specific terms may change, so it’s crucial to review the latest information directly from the issuing banks.
