Should students use a credit card?

Should students use a credit card?

author: Bryony Pearce

By Bryony Pearce

From building your credit history to being mindful of your monthly payments, we’ve covered everything you need to know before considering a credit card.


Fleeing the nest ready to start university comes with all sorts of freedom – and financial freedom is one of them. But with that financial freedom, comes responsibility.

Providing you use your plastic wisely, getting a credit card as a student could actually be quite a smart move to make. But, of course, there are a number of drawbacks if you don’t stick to sensible spending and paying your monthly repayments on time and in full each month.

If you’re a student and you’re currently deciding whether or not to take out a credit card is a good step for you, then don’t go anywhere, because we’re about to cover their advantages, golden rules, and some all-important considerations.

The benefits of using a credit card

Build your credit history

If you’re about to embark on student life, a credit card will likely be the first type of credit you’ve taken out, meaning you won’t have much of a credit history to fall back on - this is something lenders may not particularly like.

This doesn’t mean you’ll automatically get rejected, though. You could still get accepted, but you’ll probably find that a) you’re likely to be offered a lower credit limit (which could be a blessing in disguise) and b) the interest rate you’re given might not be as competitive as you would like.

Sticking with point b) for now, this doesn’t necessarily have to be a bad thing because providing you only spend on your credit card what you can afford to pay back – on time and in full - at the end of every month, you won’t have to stump up the interest repayment.

Top tip: to make sure you never miss a monthly payment, it may be worth setting up a direct debit to pay off the balance each month, or to pay more than the minimum payment.

So, if you sensibly spend on your credit card during your time at university and meet all your monthly repayments in full every month, you could start to build up a healthy credit file and show future lenders that you are in fact financially responsible should you wish to borrow in the future.

Should you wish to take out any other forms of credit after university, like a loan or mortgage, for example, this will go a long way in helping to secure the best deal for your circumstances.

Benefit from rewards

Lots of lenders are competing for your custom, and so most may offer some sort of reward(s) to entice you in. Some common rewards may include:

So by taking out a credit card, you could cash in, in other ways, too.

Protect your purchases

Credit cards come with what’s known as Section 75 protection. In a nutshell, this means that any purchases you make on your credit card that are between £100 and £30,000 could be legally protected by your credit card provider, so you may be able to claim your money back under this act should anything go wrong.  

So, what’s actually protected? Things like fraud, repairs, retailers going bust, non-delivery, and cancellations. For a closer look at Section 75, check out our dedicated blog on it here.

Credit card considerations for students

Now let’s take a look at the ‘what not to do’ list...

1)  Don’t spend more than you can afford to repay. If you’re getting your first credit card as a student, it could be easy to get carried away and start splashing out without properly thinking about your purchases.

2)  Even if you’ve got a credit card with a 0% introductory offer, small bits of spending here and there could soon build up, and without realising it, you could find yourself in a spiral of debt that you could struggle to get out of before that interest-free period is over.

3)  Don’t make lots of credit card applications in a short space of time. Prospective lenders may see each application on your credit report as some lenders may conduct a hard search each time you apply, and to them, it can make you look desperate to access cash, so you may get rejected or may be offered a higher interest rate.

4)  Don’t take out a credit card before you’ve properly done your research and know what you’re getting yourself into. Pay particular attention to things like interest rates and penalty charges, as this could help you in the future.

5)  Don’t ignore your monthly credit card statements. They could help you keep on track of how much you’ve spent, how much you owe, any interest or rewards you’ve accumulated, and it may also help to pick up fraudulent activity (if there is any!) early on.

Student credit cards: golden rules

If you’re still with us and you’re still set on taking out your first credit card as a student, here’s a recap of some of the golden rules to help you use your plastic sensibly:

1)  Always aim to pay off your balance on time and in full. If you can’t make the full amount, you could repay more than your minimum payment which’ll help you cover the interest applied on the amount of credit you’ve borrowed.

2)  Don’t go over your credit limit - if you do, you could be charged a hefty penalty fee.

3)  Don’t withdraw cash from an ATM – you could be charged for doing so.

4)  Don’t forget when using your card for purchases, your credit card could protect the purchase.

5)  You could set up a direct debit to take the stress out of remembering monthly payments dates.

And finally…

6)  Don’t spend more than you can afford to repay.

Got time to spare? Check out these credit card blunders you should probably avoid…

Disclaimer: All information and links are correct at the time of publishing.

author: Bryony Pearce

By Bryony Pearce

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Should students use a credit card? Should students use a credit card?