How to find the best credit card Student credit cards
How to choose the right student credit card
Student credit cards can be a useful budgeting tool and a good way to enjoy extra protection on your purchases. However, they are expensive to use for borrowing. The table below shows the main student credit cards available in the UK.
|Student credit cards|
|Credit card||Representative (purchase) APR||Cash withdrawal APR||Cash withdrawal fee||Max credit limit||Need current account?|
|Bank of Ireland Student Visa||17.9%||22.5%||2.5% fee (min £3)||£350||Yes|
|Halifax Student MasterCard||17.95%||23.95%||3% fee (min £3)||£500||No|
|HSBC Student Visaa||18.9%||23.6%||2.99% fee (min £3)||£500||Yes|
|NatWest Student MasterCard||18.9%||27.95%||3% fee (min £3)||£500||Yes|
|Royal Bank of Scotland Student MasterCard||18.9%||27.95%||3% fee (min £3)||£500||Yes|
|Ulster Bank Student MasterCard||18.9%||25%||3% fee (min £3)||£350||Yes|
|Bank of Scotland Student MasterCard||19.9%||19.9%||3% fee (min £3)||£500||No|
|LloydsTSB Student MasterCard||19.9%||27.95%||3% fee (min £3)||Subject to status||Yes|
a) If you book through HSBC Travel Service receive between 8% - 6% off holidays with various tour operators and 6% off car hire and airport parking and attraction tickets booked with a package holiday or flight
Advantages of student credit cards
- Using a student credit card can be cheaper than paying the high interest rates and penalty charges imposed for an unauthorised overdraft on your current account.
- If you pay off your bill in full every month, you can get up to 56 days interest-free between the purchase date and the day you have to pay your credit card bill.
- Credit cards offer extra consumer protection if things go wrong. For more detail, read the Which? guide to credit card rights, including information on your section 75 and chargeback rights.
- Student credit card providers sometimes offer discounts on products and services purchases through particular retailers. For instance, HSBC currently offers up to 8% off holidays bought through its Travel Service on trips with major providers such as Thomas Cook and Club 18-30.
- A student credit card could be a useful way to while at university. Establishing a good track record of repaying your credit card balance on time each month will make banks more likely to lend to you at a competitive rate in the future.
Disadvantages of student credit cards
- The interest rate on student credit cards is above average, between 17.9% and 19.9%. These rates are usually risk-based too, meaning that the rate you're offered by your bank could be higher than the advertised rate, depending on your personal circumstances and your credit history.
- As with all credit cards, withdrawing cash on a student credit card is very expensive. An interest rate of 27.9% is common, and you'll have to pay a fee of around 3% of the value of each withdrawal (minimum £3).
- You have to make at least the minimum payment each month to avoid high penalties.
- Most student cards are only available to current account holders - including student accounts - with the same bank, making it difficult to shop around and to switch between cards.
Alternatives to student credit cards
While student credit cards are, as the name suggests, solely aimed at students, that doesn't stop you applying for the other credit cards on the market. However, as most students don't have a long credit history and are therefore likely to have a low credit rating, banks may be reluctant to offer you the best deals. Be wary of credit cards that offer to help you build your credit score – APRs of around 35% are common, making them a very expensive way to borrow. For tips on improving your credit score, read the Which? guide Your credit score explained.
If you've already exhausted the bank of mum and dad, make sure you read the Which? guide to student loans and finance for alternative sources of student income and advice.
Payment protection insurance (PPI) on student credit cards
Payment protection insurance (PPI) offers to pay your monthly credit card repayment for you if you can't work or you fall ill. However, it has been widely mis-sold in the past and is inappropriate for the vast majority of students – the small print of the policy prevents most students from ever being able to claim on the policy. If you're offered PPI with your credit card, turn it down.
If you've held a student credit card in the past few years, check your statements to see if you've been paying PPI on your card balance. If you have, use the free Which? online PPI-reclaiming tool to submit a claim for a refund.