Should you get a credit card during uni?

Should you get a credit card during uni?

As another year of university starts again, many young Aussies may be asking themselves how they’ll be able to afford the costs that come with schooling.

Most students can keep up with casual or part-time work at the most while juggling their schoolwork. Which means cash can often be in short supply.

One option students may turn to is taking out a credit card. But is this really the best choice for your schooling years?

Here’s the reality of how credit cards can have their advantages and disadvantages for students.

Pros and cons of having a credit card as a student


  • Build your credit history. As a young Australian, you’re unlikely to have built up a credit history yet. A good credit history and score is important for anything from getting a rental lease to applying for a home loan one day.
  • Learn good money habits. Having a credit card is a lot of responsibility. You’ll need to plan ahead if you want to avoid falling into debt. A credit card can be helpful in teaching students about creating a budget and sticking to it, as well as making sure bills are paid on time.
  • Overseas travel can be easier. Credit cards can also be a helpful resource when travelling overseas. Often, they may be needed when booking accommodation and rental cars, especially in places like America where they may not accept debit cards for these services. Further, they can take the pressure off your savings when used for a holding deposit when staying in a hotel.
  • Access to credit when needed. The most obvious advantage of a credit card is the access to credit you otherwise wouldn’t have. Whether you use this for supplies like a laptop, lab equipment and books, or keep in your back pocket for emergencies, a credit card can offer peace of mind for cash-strapped students.


  • Debt early in life. There’s a reason credit cards and debt often go hand in hand. Credit card debt accumulates when interest is applied to a balance that hasn’t been paid off by the end of the billing period. Many Australians (not just students) are unprepared and uninformed about how a credit card works, and how easily debt can snowball. The last thing you want is to leave university with thousands of dollars of credit card debt (on top of a HECS-HELP debt).
  • Messing up your credit history. They say it’s worse to have a bad credit score than a bad reputation, which goes to show just how important your credit history is. If you’re reckless with your credit card, this could set your future financial life up for failure. For example, a default can stay on your credit file for five years.
  • Buying what you can’t afford. Another common trap people fall into is spending up to their credit limit, just because it’s there. It’s generally recommended you don’t purchase something you can’t otherwise afford. Especially within your billing period so you don’t accrue interest on outstanding debt.


What to look for in a credit card

If you’re still interested in taking out a credit card, there are a few things to look for that can help keep you out of debt (and out of trouble).

You may want to consider looking for a credit card with:

  • A low credit limit
  • A low interest rate
  • Low or no fees

A low credit limit will reduce the amount of debt you may fall into if you max your credit card. You’ll also more likely be approved for a card with a low credit limit ($5k or under) than a higher one if you have a low income or short credit history, as many students do.

Low interest rates and low fees are a no-brainer when it comes to getting any financial product. However, when it comes to credit cards, higher fees or rates often go hand-in-hand with rewards programs and other perks.

If you’re a student, consider whether those kinds of extras are really necessary for your lifestyle and worth the cost. A basic, low rate credit card may be a better suit for your financial needs and budget. If you think there may be times you can’t pay your credit card balance in full each billing cycle, you’ll want to consider a low rate option.

However, if you’ve set a budget and know you’ll pay off your balance in full before it can accrue interest, you may want to prioritise avoiding credit card fees. There are 32 credit cards in the RateCity database that don’t charge annual fees.

Are there student-specific credit cards?

There is currently only one student-specific credit card in the Australian market.

ANZ offers the First Student credit card for those 18-or older studying full-time at an eligible Australian education institution. To be eligible, applicants need an annual income of at least $15,000. This may include payments from part time work, Youth Allowance and Austudy.

However, it’s crucial that you do your own research and choose a credit card that suits your needs and budget. There’s no one-size-fits-all credit card for students even if a credit card provider has labelled it as such.

A good way to find a credit card that suits you is to use comparison tools. A comparison table will show you a range of card options, as well as the purchase rate, interest free days, and fees. This helps you compare apples with apples and narrow down your choice.

Here are the lowest rate credit card options in the RateCity database:

Credit card Purchase rate Annual fee Interest free days
G&C Mutual Bank Low Rate Visa Card 7.49% $50 50
Auswide Bank Low Rate Visa Card 8.70% $50 55
American Express Low Rate Card 8.99% $0 55
Community First CU Low Rate Card 8.99% $40 55
Northern Inland CU Low Rate Visa 8.99% $0 0


What other financial assistance options do I have as a student?

According to StudyAssist, there are a range of government loans and subsidies in place, including:

  • HECS-HELP: A loan scheme to help eligible Commonwealth-supported students to pay their student contribution amounts through a loan or upfront discounts.
  • FEE-HELP: A loan to help eligible fee-paying students to pay their tuition fees.
  • SA-HELP: A loan that assists eligible students to pay for all or part of their student services and amenities fees.
  • OS-HELP: A loan to help eligible Commonwealth supported students pay their overseas study expenses.
  • VET Student Loans: A loan program that helps eligible students enrolled in certain higher-level vocational education and training courses at approved course providers to pay their tuition fees.

However, many young Aussies are pushing credit cards to the wayside in favour of buy- now-pay-later services, like Afterpay.

According to the report “BNPL 2019: More Shoppers, More Players and More Options” from Power Retail, use of credit cards as an online shopping payment method usage had fallen from 35 per cent to 29 percent in the 12-months leading to September 2019.

Further, around half of under-30s were found to have used a buy-now-pay-later service.

When it comes to the best way of financing your student days, the answer is really up to your personal preferences. As long as you do your research before making any decision, you’ll hopefully put yourself in a good financial position for the future.

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Learn more about credit cards

How easy is it to get a credit card?

For most Australians, there are no great barriers to applying for and getting approved for a credit card. Here are some points that a lender will consider when assessing your credit card application.

Credit score: A bad credit score is not the be all and end all of your application, but it may stop you being approved for a higher credit limit. If your credit score is less than perfect, apply for the credit limit that you need, rather than the one you want.

Annual income: Most credit cards have minimum annual income requirements. Make sure you’re applying for a card where you meet the minimum.

Age & residency: You need to be at least 18 years old to apply for a credit card in Australia, and most require that you are an Australian citizen or permanent resident. However, there are some credit cards available to temporary residents.

How do you use credit cards?

A credit card can be an easy way to make purchases online, in person or over the phone. When used properly, a credit card can even help you manage your cash flow. But before applying for a credit card, it’s good to know how they work. A credit card is essentially a personal line of credit which lets you buy things and pay for them later. As a card holder, you’ll be given a credit limit and (potentially) charged interest on the money the bank lends you. At the end of each billing period, the bank will send you a statement which shows your outstanding balance and the minimum amount you need to pay back. If you don’t pay back the full balance amount, the bank will begin charging you interest.

Can a pensioner get a credit card?

It is possible to get a credit card as a pensioner. There are some factors to keep in mind, including:

  • Annual income. Look for credit cards with minimum annual income requirements you can meet. 
  • Annual fees. If high fees are a concern for you, opt for a card with a low or $0 annual fee. 
  • Interest rate. Make sure you won’t have any nasty surprises on your credit card bill. Compare cards with a low interest rates to minimise risk.

What should you do if your credit card is compromised?

Credit card fraud is a serious problem. If your credit card is compromised and you’re wondering what to do, here are a few precautionary steps to take.

Contact you credit provider – Get in touch will your credit card provider. If you feel your card has been compromised, you should be able to lock or block it.

Monitor your accounts – Keep an eye on your credit card accounts. Any unauthorised transactions could be a sign your credit card has been compromised.

Check your credit rating – It’s also important to check your credit rating, to ensure you’re not a victim of identity theft or some other financial mischief.

Do you need a credit card to get a loan?

You do not need a credit card to get a loan, but you usually need to have a credit history. Without a credit history, a financial institution cannot assess your ‘credit worthiness’, or your capacity to pay off the loan.

If you don’t have a credit card, your credit history can reflect any record of paying off an asset. Without any credit credit history, you’re limited in the type of loans you can apply for. But you may be able to obtain a secured loan against an asset. For more information on improving your credit score, go here

What should you do when you lose your credit card?

Losing your credit card is a serious situation, and could land you in financial trouble. Here is a simple guide detailing what to do when you lose your credit card.

Lock you card – Contact your provider and inform them about your lost credit card. From here lock, block or cancel your card.

Keep track of transactions – Look out for unauthorised credit card transactions. Most banks protect against fraudulent transactions.

Address recurring charges – If your card is linked to recurring charges (gym membership, rent, utilities), contact those businesses.

Check credit rate – To ensure you’re not the victim of identity theft, check your credit rating a month or two after you lose your credit card.

How do you use a credit card?

Credit cards are a quick and convenient way to pay for items in store, online or over the phone. You can use a credit card as a cashless way to pay for goods or services, both locally and overseas. You can also use a credit card to make a cash advance, which gives you the flexibility to withdraw cash from your credit card account. Because a credit card uses the bank’s funds instead of your own, you will be charged interest on the money you spend – unless you pay off the entire debt within the interest-free period. If you pay the minimum monthly repayment, you will be charged interest. There are many different credit card options on the market, all offering different interest rates and reward options.

What is a balance transfer credit card?

A balance transfer credit card lets you transfer your debt balance from one credit card to another. A balance transfer credit card generally has a 0 per cent interest rate for a set period of time. When you roll your debt balance over to a new credit card, you’ll be able to take advantage of the interest-free period to pay your credit card debt off faster without accruing additional interest charges. If your application is approved, the provider will pay out your old credit card and transfer your debt balance over to the new card. 

Should I get a credit card?

Once you've compared credit card interest rates and deals and found the right card for you, the actual process of getting a credit card is quite straightforward. You can apply for a credit card online, over the phone or in person at a bank branch. 

How to get a credit card for the first time

A credit card can be a useful financial tool, provided you understand the risks and can meet repayment obligations.

If you’re a credit card first-timer, review your options. Think about what kind of credit card would suit your lifestyle, and compare providers by fees, perks and repayments.

Once you’ve selected a card, it’s time to apply. Credit card applications can generally be completed in store, online or over the phone.

When you apply for a credit card for the first time, you must meet age, residency and income requirements. As proof, you must also provide documentation such as bank account statements.

How to pay a credit card

There are a few ways to pay a credit card bill. These include:

  • BPAY - allows you to safely make credit card payments online.
  • Direct debits - set up an automatic payment from your bank account to pay your credit card bill each month. You can choose how much you want to pay of your credit card bill when you set up the auto payments.
  • In a branch.
  • Via your credit card provider's app.

How do you apply for a credit card?

You can apply for a credit card online, over the phone or in person at the bank. Once you’ve compared the current credit card offers, the application process is quick and easy. Before you get your application started, you’ll need to gather your personal information like proof of ID, payslips and bank statements, proof of employment and details of your income, assets and liabilities. To be eligible for a credit card, you’ll need to be an Australian citizen over 18 and earn a minimum of $15,000 each year. Once you’ve applied for a credit card, you should get a response fairly instantly. If your credit card application has been approved, you should receive a welcome pack with your new credit card within 10-15 days.

How to pay a credit card from another bank

Paying or transferring debt from one lender to the other is called a balance transfer. This involves transferring part or all of the debt from a credit card with one lender to a credit card with another. As part of the process, your new lender will pay out the old lender, so that you now owe the same amount of money but to a new institution.

Many credit card providers offer an interest-free period on balance transfers to help new applicants better handle their debt. During this period, cardholders are not required to pay interest on the debt they brought over from the other card. This can be a great opportunity for consumers to pay off credit card debt with no interest. There are often fees associated with balance transfers; normally, these are a percentage of the amount transferred.

So make sure you read the terms and conditions of the card before transferring any debt across.

Which credit card has the highest annual percentage rate?

The credit card market changes all the time, so the credit card with the highest annual percentage rate is also liable to change.

Keep in mind that credit card interest rates are expressed as a yearly rate, or annual percentage rate (APR). A low APR is generally good but also consider:

  • There can be different APR's for each feature of the card (e.g. purchases may have an APR of 14 per cent, while cash advances on same card could have an APR of 17 per cent.
  • Credit cards with a variable rate can change throughout the year, affecting your APR, so check the full details.
  • If you pay your balance in full every month, having the lowest APR is not as important as the other fees associated with the card. However, if you carry a balance from month to month, then you want the lowest APR possible.