You’ve left home and you’re on your way to university; dreaming of the nights out, lie-ins and all the other freedoms that come with being independent. But with this freedom comes a whole new realm of responsibility – you’ll be cooking for yourself, tackling your studies independently and, perhaps most overwhelming of all, managing your money.
We get it! Finding your financial feet can be scary. That’s where we come in. Curve is here to open your eyes to the world of student credit cards – so you can be sure you are well equipped to make some killer financial decisions.
So what exactly is a student credit card & how does it differ from a regular credit card?
- A credit card is a nifty little piece of plastic (or metal, sometimes, if you’re a Curve customer!) that allows you, the cardholder, to buy your favourite things ‘on credit’. In other words, you take a temporary loan from your bank or building society – and you can keep taking these mini-loans until you reach your credit limit.
- Your credit limit is the maximum amount of money your bank will loan to you within a given period. At the end of that period (usually a month), you will be asked by your bank to repay the money that you spent on your card. If you can pay this balance off in full (as opposed to just meeting the minimum payment limit), you don’t pay any interest.
- But if you can’t pay your bill, you will be charged interest on your spending. Banks usually publish interest rates as an annual percentage rate (known as APR). They get pretty competitive about the APR rates they offer. Make sure you’re looking for the lowest ones.
So why is there a separate type of credit card for students?
That’s because students are considered by banks to be ‘high-risk’ customers. Let’s be real here, students are not exactly renowned for knowing their limits – whether it’s for nights out or spending. And with a million more exciting things to do, sometimes students aren’t fussed about paying their credit card bills on time. Banks offer student credit cards – with slightly different terms & conditions – to protect themselves from these risks.
Student credit cards tend to have lower credit limits than most regular credit cards, and the interest rate that is charged when bills aren’t repaid is higher. As a general rule of thumb with student credit cards, the higher your credit limit – the higher the interest rate charged.
So why apply for a student credit card?
With so many things to remember – credit limits, bill payments etc., it might seem nonsensical to apply for a student credit card (after all, University is all about fun, right?). Despite how scary they might seem, credit cards offer some unique advantages that even students can benefit from:
- Improve Your Credit Rating: Your credit rating (also known as your credit score) lets banks (and other credit card companies) know how ‘risky’ you as a customer are. A high credit rating suggests you have a good credit history, and are likely to repay your bills on time, and so banks are more likely to approve the loans and credit card applications that you apply for.
Although this might not seem relevant whilst you’re at university, if you’re hoping to own a home one day, you’ll probably need a mortgage. A mortgage is an example of a loan that a bank will need to approve, and you can bet they’ll have a look at your credit rating when deciding on this. So building up a good credit rating whilst you’re at university (provided you pay your bills on time, of course), shows lenders you’re a reliable borrower, getting you one step closer to that big house or flashy car that you’ve had your eye on.
- Spread The Big Costs: Yep, student life is expensive. And when you’re working out your weekly budget, you don’t really want to incorporate a massive cost like rent. With a credit card, you can spread these big costs without it affecting smaller expenses like your weekly shop. Pay for those expensive textbooks, new laptop, and other things that you just ‘must have’ using your credit card and then pay it off in smaller increments – freeing up your cash flow in the meantime (be sure to pay off your credit card bill when, or even before, it is required, you don’t want to be paying interest on textbooks!).
- No Annual Fees: Most banks offer student credit cards with low to no annual fees. This makes them a more affordable option than a standard credit card.
- Section 75 Purchase Protection: We know that to a student, £100 is a lot of money. So we know that if you’re spending that much money on one thing, it’s a pretty big deal. Section 75 Protection gives you an extra layer of protection against fraud, non-delivery or a company going bust, if the transaction (which must be over £100) was made on your credit card. Should you find yourself in need of this protection, the credit card company you are with will assume responsibility for the retailer or trader, and refund your transaction. Of course, if you add your credit cards to Curve, you get Curve Customer Protection, which gives you awesome coverage for purchases up to £100,000, filling in the gaps Section 75 leaves, and providing an added layer between you and unscrupulous sellers.
Now that you’ve seen just how great using a credit card can be, here are our top tips to help you get the most out of your credit card:
- Don’t Withdraw Cash: Most banks apply a cash advance fee for credit card withdrawals made at ATMs. Cash advance fees are usually between 3 and 5% of the money you are looking to withdraw. This makes your cash more expensive, which is not helpful on a student budget!
- Only Apply For One Credit Card At A Time: Credit cards are always a risky business for banks, and so in order to protect themselves, they identify certain behaviours that might make an applicant more ‘risky’. Banks might assume you are desperate for credit if you make multiple applications within a short window. It is important to pick a card that you not only like the look of, but that you also believe you will be accepted for. You can check your eligibility online, before you apply.
- Check Your Statements Regularly: Not only will this help you stay on top of your repayments, it will also allow you to check for fraud & unhelpful student spending habits (maybe next time you’re on a night out, leave your credit card at home.) Most credit card providers now offer online banking or apps that make checking your statement easier than ever.
Made your decision? All that’s left to do now is find a space for your new baby in your wallet. Or even better, if you add your card to Curve, you don’t need to carry around that wallet at all. Add your cards* to the Curve App and view your money in one place, making it far easier to keep track of everything from that books budget to late night takeaways.
* cards on Visa and MasterCard.