More Helpful Info about Credit Cards for Students

Student Cards are cards designed for students. They have features like no annual fee, low interest rates and a low credit limit. If you’re a student, no matter what you’re looking for, you probably want it cheap! Well, student cards can give you that and are there to help you manage your finances for the duration of your study years.

If your parents haven’t given you the ins and outs of wise money management, your young adult years are the most important time to get things clear in your own head and build good habits so you don’t run into trouble later in life. That’s why we want you to understand what a student card can and can’t do for you and how to use one if you get one. It pays to get into good routines now and you’re wise if you ask lots of questions and only use those plastic cards as they’re intended. It’ll be best for you in the long run, believe me!

Q. What is a student card? A. A student card is a debit or credit card made with the student in mind. You have to be a student to be eligible for one and they’ve got features and safeguards built in to make sure they work best for the student.

The debit card is one of the best and most prudent options for university students as they seek effective ways is to spend their own money and avoid building up credit card debt in the first place. One such card is the ANZ Visa debit card, which will give the student access to their own money through the Visa network.

Alternatively, a student credit card is ideal for university students because it has an ongoing low monthly rate and low credit limit. The low monthly rate means you should have relatively small repayments to make and the low credit limit should restrict the possibility of racking up large amounts of costly student credit card debt.

Following are some more commonly asked questions we hope you make a clear and informed decision regarding student cards.

Q: What are the benefits of a student credit card? A: Credit cards certainly have their perks if you use them wisely, having a student credit card is a great opportunity to start learning to use one responsibly in a fairly low risk way. The reason these cards are reasonably low risk is that the credit limit is kept intentionally fairly low meaning you can only overspend so much before your card maxes out. You then need to pay off your debt before you can spend more. You also get to enjoy a $0 or very low annual fee meaning you have the convenience of a credit card but it costs you practically nothing.

Lastly, having a student credit card gives you the opportunity to establish a good credit record. A credit record is simply what you get when you have a credit card and make your repayments regularly and in full. It shows future credit card companies that can be trusted with a more powerful card because you’ve been faithful with the last one you had.

Q: Are there drawbacks? A: Unfortunately, yes. Even though the credit limits are low, any credit card can open the door to building up debt. And student cards often have high interest rates making debt even easier to accrue. If a student doesn’t fully understand how interest works and isn’t organised enough to make their repayments punctually, they could easily get themselves in trouble. Any credit card in the hands of a disorganised spender can spell disaster. Note too, that if you’re paying for your education with the credit card, you could end up in big trouble because of the interest!

Q: How do I know if I’m eligible for a student card? A: There are a few special requirements that will increase your chances of successfully applying for a student card. These include:

• Being over 18
• Being an Australian Citizen
• Being enrolled in an accredited school
• Having a co-signer – someone, usually a parent or guardian who is willing to co-sign and basically be responsible to pay your debts in case you’re unable to pay them
• Having a savings account with the bank that is issuing the card before you apply

Q. What features should I look for? A. You want a card with low or no annual fee, low interest rates and if you have debt elsewhere, a balance transfer facility so you can transfer your balance to the new card (assuming it has a better rate and hopefully even a great introductory balance transfer rate and period to help you get the debt down). Most cards also have basic security features which are desirable.

Q. How can I best manage my finances and use my student credit card? A. Here are a few basic tips to keep you out of trouble:

• Have some life goals – This is a great starting point because it will motivate you to keep out of debt more than anything else. If you want to buy a car or house one day, you’ll have the incentive to live conservatively for the sake of the greater goal. Whatever money you get, try to put a little of it aside every week toward your goal, no matter what.
• Make a budget and stick to it – Be realistic when you budget and include recreational spending because this is normally where the money gets blown. If you know what you’ve got to spend, you’ll be more likely to stick to it. Break it down into a monthly and weekly budget. Get some help from a friend or online if you’re stuck.
• Live within your means – That’s right, everyone else might be accumulating debt but you’ll be so much better off spending only what you have or what you know you can pay off in full at the end of the month.
• Have an emergency fund – Most people rely on their credit card for emergencies. You’ll do yourself a favour if you set aside some money in an emergency savings account. Then, when an emergency comes (which is inevitable), you won’t have to go into debt amidst an already stressful time.
• Pay in cash as much as you can – Paying for things in cash means you’re paying for things with your own money. It’s much easier to lose track when you pay for everything with a plastic card.
• Use your card as little as possible – Sometimes you need a credit card for online purchasing or other needs, but because student cards don’t generally have any rewards programs, not to mention, they have low credit limits, you’re not doing yourself any favours by using it for the sake of using it. Keep it for when you have no other option.
• Pay off your balance in full each month – You want to build up a good credit rating and stay out of debt. Paying off your balance and covering anything you’ve spent that month promptly will accomplish that.

Q: What happens if I can’t make a payment? A: If you don’t make your monthly repayments on a credit card, it’s important to understand the consequences. They’re not pretty! Whatever you don’t pay off, you’ll get charged interest for and instantly your debt is increased. If you just let the debt sit there without paying it down, it will automatically grow astronomically. This is why so many students get into trouble because they don’t realise how quickly debts can get out of hand if they’re not on top of them. Additionally, if a credit provider sees that you’re not paying down your debt they can even increase your interest rate and you’ll be in even more trouble.

Lastly, in addition to accumulating a huge and possibly overwhelming and impossible debt, you will damage your credit rating by not making your repayments. This will affect any future credit card applications and can even hinder you getting a rental property or loan of any kind, including a car or home loan. If you want to keep your options open in the future, do not go down this track – you will end up miserable! If you’re in trouble and need help there are a wealth of resources online, in local libraries and in credit centres everywhere.

Q: Should I go with a credit or debit card? A: Debit cards function very similarly to credit cards except for one major difference. Debit cards use money you already have, credit cards use money you don’t have (and can put you into debt unless you manage your account). Unless you have to spend money you don’t have, a debit card is more than fine for pretty well anything you’d use a credit card for, including online shopping. The best part is it eliminates the risk of losing track of spending and getting into debt. So if you can go with that option, do it! If you’re worried about needing funds in an emergency, start putting aside some money each week for that very purpose now.

Q: How do I apply? A: Do your homework paying careful attention to interest rates and all the fine details, make sure you’re eligible and hit 'Apply’.