Start building your credit history from the get-go with a student credit card
Student credit cards can be the first step on a credit ladder. While paying on plastic gives a sense of financial freedom, this liberty comes with responsibility. Here we look at the features, benefits and drawbacks students should consider before jumping on the credit card bandwagon.
Student Credit Card Offer
The ANZ First Student credit card is tailored specifically for students. It features a 44 days interest-free and a low credit limit and no annual fee for the first year.
- $0 p.a. annual fee for the first year ($30 p.a. thereafter) annual fee
- 19.74% p.a. on purchases
- Cash Advance Rate of 21.49% p.a.
- Up to 44 days interest free
- Minimum Income Requirement of $15,000 p.a.
Student Credit Cards Comparison
Rates last updated April 24th, 2017.
- Bankwest Breeze MasterCard
New balance transfer offer of 0% p.a. for 21 months with 2% BT fee and 12.99% p.a. on purchases
December 12th, 2016
- Citi Simplicity Card
0% p.a. for 9 months has been updated to 15 mos. on balance transfers. Offer ends 30 June 2017.
January 13th, 2017
- NAB Low Rate Credit Card
Balance transfer period changed from 15 to 18 months, and is valid until 31 May 2017.
January 23rd, 2017
What is the purpose of a student credit card?
With the ubiquitous use of credit cards, it is but natural that students get attracted to them. Credit cards also provide easier management of purchases and simpler repayment options for guardians or students themselves. They also help in cultivating financial discipline within the students as any heavy, superfluous expense is quickly noticed.
What factors should I consider when comparing student credit cards?
It is always better to arm yourself with thorough information before making a financial decision. We look at some of the major factors you can consider when comparing student credit cards:
- Fees. The first consideration should be the fees on the card. As a rule of thumb we can say that the more basic the card, the lower the annual fee. As we go up the value chain of credit cards the annual fees start increasing.
- Interest rates. The interest cost on credit cards has led to huge debt burden for many cardholders. As a student, it is ideal to look for low interest rate cards. However, you should carefully look at the time period during which low interest rates are provided. Some credit cards offer low interest rate for initial period of 3 to 12 months after which they revert to a higher rate.
- Extra features. If you are planning on traveling in the near future you can look at cards offering complimentary travel insurance. Also other features like Purchase Protection Insurance, Lost Card Insurance and Extended Warranty insurance are also quite useful. Some card companies would also provide reward points or cash back on certain purchases.
- What is my credit history like? For many students, a student credit card is the first card they start using. However some of them might already have used other credit products and would have less than perfect credit history on them. In this case you would need to look for firms which provide cards for your specific situation.
- Can I manage my account online? The credit card should have easy online management system where you can quickly access the expenses, limits, interest rates and also get to know about any new offers.
What information will I need while applying?
The details required would differ from bank to bank. Some of the most common information required by banks while processing student credit cards includes:
- Personal details. This includes information like full name, date of birth, contact details, email and more.
- Co-signer. Credit card companies might ask for a co-signer. This is a person who would act as collateral or insurance, in case you are unable to pay off the debt. This can be your guardian, parent, or any family member.
- Student details. Information about your university, course, current year, and more can be asked. You would also need to provide your student card details.
- Present financial details. Your current income and expense details are required during application. They might also ask about your current income or assets.
How can I apply?
The application process is customised by banks according to their requirement. The general process for applying for a student credit card is:
- Thorough research. The first step should always include thorough research about all the options available in your financial situation. You can compare all the cards provided on this page which will give a complete idea of the various benefits and features of the card.
- Finalise a card. After adequate comparison you need to pick a card which is suitable for your needs. You should check the eligibility criteria for the card and make sure you meet the conditions.
- Filling the application form. You can select a card from finder.com.au and click on ‘Go To Site’ on the page. This link will securely redirect you to the online application form for the respective card. Filling the form generally takes around 10 minutes. Make sure that all the information is correct and submit the form to the bank. Most banks will respond within a couple of minutes indicating that they have successfully received the form.
- Wait for approval. The final verification of details and other documents can take three to five business days. Once your application is verified, the firm will contact you. If you’ve been approved, you should usually expect to receive your card within seven to 10 days.
It is important to note that the credit card firms will look at past credit history while processing the application. A major aspect of past credit history also includes the recent applications sent by the individual. If there are several rejections for applications of a credit card, it would reflect poorly on your credit rating. So it’s important to conduct research to ensure you meet the eligibility requirements before firing several credit card applications off.
Student credit cards can be a good way for cardholders to kickstart their credit history. Generally, these cards have a lower fee structure owing to limited repayment capacity of the students. If you use the card appropriately, by only making necessary purchases and paying your bills on time, you could start building a good credit history which will benefit you later in life. As there are many student credit cards on offer, it’s worthwhile to compare your options to find the right card for you.Back to top
Frequently Asked Questions
I am currently in my second year. Should I use a new student credit card or use an additional card provided on my parents account?
You can choose either of the student credit card options available. Having your own card will entail an extra expense of annual fee, if there is any. Supplementary cards on your parent account are generally free and would also help in earning any reward points.
However, having your own credit card will help you learn how to manage your finances independently. It would also help in building a credit record which can be very useful once you graduate.
I overspent on my credit card leading to heavy balance amount. What should I do in this case?
If you have a card where the interest rate is low or zero, you can stick with the card and try and reduce the balance in the next couple of months. If the balance is attracting heavy interest rates of 15-20%, you can move to another card using a balance transfer offer. This could give sufficient breathing room of 0% p.a. interest rate for couple of months during which time you can bring the debt to manageable level.
What is the ideal limit for the credit card?
You should keep the credit limit as low as possible. This would deter any unnecessary splurge on expenses and will help keep your balance to a sustainable level.