Credit Cards For Students in Australia: A Complete Guide

Have you just started university in Australia? Are you wondering how to pay for all those expenses? As a student, covering textbooks, rent, study supplies, travel, and more costs can be challenging.

A student credit card can solve all your problems, helping you pay for online purchases and cover emergency expenses. However, you need a financial understanding and know how to correctly use the student credit card.

This post will discuss everything you need to know about getting Australia's best student credit cards. So keep reading!

1. What Is A Student Credit Card?

A student credit card is specially designed for students with inconsistent employment or credit history. It allows you to buy essential items you need and then eventually pay off credit transactions over time with interest. 

Compared to standard credit cards, student credit card plans in Australia offer lower interest rates, which helps you to keep down your account costs, especially when you are studying full-time.

Using a student credit card responsibly while studying at university or TAFE and paying off your balance each month can help you improve your credit history. This can also be useful in the future when you apply for a mortgage, car loan, or any other form of lending product.

2. How Does A Student Credit Card Work?

A student credit card works the same way as a standard credit card, but it typically has lower annual fees and credit limits. You can use these cards to either spend or borrow a certain amount. The amount you spend is your "balance," and the available amount left to use is your "credit limit."

When using a student credit card, you will receive a monthly credit statement requiring you to pay a minimum repayment amount specified for a particular duration.

Usually, minimum repayments are 2 to 3 per cent of your remaining balance. Remember that you must pay the minimum repayment by the due date. This will enable you to pay off the amount you spent over time.

However, making a full monthly payment is advised because if you don't, you may incur interest charges, and your debt might keep increasing.

3. How To Choose The Best Student Credit Card?

Once you decide to get a student credit card, there are several factors that you need to consider. Most banks in Australia offer credit cards mainly designed to meet the requirements of tertiary students, and some even provide several other options. 

So it is essential to know what credit card features will work best for you. Here are some of the features you can consider when choosing the best student credit card:

• Low-Interest Rate: Always look for credit cards with lower interest rates to keep your bills under control. A lower rate will also come in handy whenever you miss a due date or if you are running low on cash for a few months. Using your credit card responsibly is always better to avoid paying interest.

• Low Annual Fee: While some banks may exempt annual fees for student accounts, credit cards may differ. So in this situation, you need to take the responsibility to choose a card with a low cost or no annual fee. After graduating, you can keep the same credit card without making any changes.

• Contactless Options: "Tap & Go" is today's most convenient option. Therefore, choose a card that allows you to make contactless payments by simply tapping for small purchases.

• Complimentary Extras: Look for a student credit card with additional benefits like extended warranties for some items you want to purchase with your card or complimentary purchase protection insurance. This could be especially helpful if you use the card to acquire costly textbooks, a laptop, or other supplies for university.

• Online Banking Option: If you are someone who manages everything through their smartphones, from ordering take-out to managing your bank account, you should ensure that your card has an online banking option. It will help you pay your bills and check your statement anytime.

Here is a list of banks that offer the best student credit cards in Australia:

• ANZ Credit Card

• The Qantas American Express Discovery Card

• Coles Student Credit Card

• Commonwealth Credit Card

• Bankwest Zero Mastercard

• Westpac Student Credit Card

• ING Orange One Credit Card

• NAB Student Credit Cards

4. How To Apply For A Student Credit Card?

After you have found a suitable credit card, the next thing you need to do is apply for it. The application process hardly takes time; you can easily do it in 20 minutes online. You can also visit the branch or call the bank directly.

Before filling out the credit card application form, you must ensure that you fulfil specific eligibility requirements. Remember, these requirements may vary from one bank to the other, but it generally includes the following:

• You must be over 18 years of age to apply for a credit card in Australia. If your age is between 16 and 18 years, you can be a supplementary cardholder to your guardian's or your parents' account.

• A few banks in Australia provide credit cards to international students. But for that, you need to provide your current visa status, show that you have money in your Australian bank account, and other details. Furthermore, you should be employed in Australia to obtain a credit card.

• You must enrol in a full-time course at TAFE or university to get a student credit card.

• Some banks may require you to earn a minimum income to apply for a student credit card. In this situation, you can often consider Youth Allowance or Austudy towards your income.

5. What Are The Advantages of A Student Credit Card?

• Building a Credit History: If you are using your credit card responsibly, making monthly payments on time and staying within your credit limit, a credit card can help you build a credit history and improve your credit score. This can further help you apply for other forms of credit, like a mortgage or loan, in the future.

• Rewards: Some credit cards offer benefits such as discounts or cashback at your favourite retailers. However, you must not get swayed by it and focus on correctly using the card.

• Security: Credit cards have a zero liability policy and come with security systems. So if somebody gets your credit card information or you face trouble while buying or making a payment online, these security systems will ensure that you are always protected and nothing gets in your way.

• Low Credit Card Limits: A lower credit limit can restrict you from spending too much on frivolous items. Also, with a limit, it will be easier to stay within a budget, enabling you to make payments on time and avoid serious debts.

6. What Are The Disadvantages of A Student Credit Card?

• High-Interest Rates: Student credit cards may have higher interest rates. Therefore, if you do not make full monthly payments, it can be an expensive process.

• Missed Payments can Impact your Credit Score: If you fail to pay the minimum repayment amount each month, it can negatively affect your credit score.

• Low Credit Limits: Even though a low credit limit can protect you from spending too much, at some point, you may feel that the credit limit is not enough to fulfil your requirements.

• High Fees: If you use your student credit card for cash withdrawals, you will have to pay interest and additional fees. You will also be charged an expensive fee if you use your card overseas.

7. Tips For Using A Student Credit Card

If you are using a credit card for the first time, the simple tips mentioned below will help you to know more about the dos and don'ts of using a student credit card.

• Aim to Pay Off Full Balance Every Month: Even though you are only expected to pay a minimum monthly repayment, you can end up in massive debt and high-interest costs. So try to make full payments each month and avoid any trouble.

• Use your Credit Card Only for Essential Items: If you want to purchase something that is not a necessity right now, you should try saving money for it rather than using your credit card. Keep your credit card at home and use it only for essential items like groceries, textbooks, and other emergencies. This is a great idea to save yourself from spending a lot.

• Pay As you Go: Although you receive credit card statements once a month, it is always better to pay off the balance more often. This approach will help you improve your credit score and reduce your interest rate.

• Maintain a Proper Budget: Before using your credit card, it is vital to create a set budget for essential items like textbooks, school supplies, and more. Additionally, you must also leave space for other necessary expenses that may arise. Maintaining and sticking to a budget will help you keep money aside to make full monthly credit payments.

8. Should You Get A Student Credit Card?

It is essential to run your estimates, do thorough research, and evaluate whether there is an alternative before you sign up for a student credit card.

If you have yet to apply for one, you can always use a debit card that allows you to spend money in your bank account without the risk of debt.

Credit cards are designed for convenience and should only be considered a necessity. So whether you have a credit or not, you should only spend money on something you can afford.

9. Common Mistakes to Avoid with Student Credit Cards

While student credit cards can be advantageous, being aware of potential pitfalls is essential. Avoiding common mistakes can help you make the most of your credit card without falling into financial traps.

• Ignoring Minimum Payments: Neglecting to make at least the minimum monthly payments can result in penalties interest charges, and negatively impact your credit score. Always prioritize meeting the minimum payment requirement to maintain a healthy financial standing.

• Excessive Spending: A student credit card is a financial tool, not an endless source of funds. Resist the temptation to overspend, especially on non-essential items. Strive to use the card responsibly and within your means.

• Overlooking Fees: While student credit cards often have lower annual fees, it's crucial to understand and be mindful of any additional charges. Be aware of fees related to late payments, cash withdrawals, or international transactions to avoid unexpected financial burdens.

• Neglecting Budgeting: Failing to establish a budget can lead to uncontrolled spending and difficulty making timely payments. Maintain a clear budget that outlines your essential expenses and allows you to allocate funds responsibly.

10. Maximising Rewards and Benefits with Your Student Credit Card

Unlocking the full potential of your student credit card involves understanding and utilising the available rewards and benefits. Here are strategies to maximize your credit card perks:

• Strategic Spending: Leverage your credit card rewards by aligning your spending with available benefits. Some cards offer cashback or discounts on specific categories such as groceries, textbooks, or dining. Tailor your purchases to capitalize on these rewards.

• Timely Redemption: If your student credit card has reward points, ensure timely redemption. Points may have expiration dates or lose value over time. Regularly check your accumulated rewards and redeem them for optimal value.

• Utilise Additional Features: Explore the supplementary features offered by your student credit card, such as extended warranties, purchase protection, or travel insurance. Understanding and utilizing these features can add significant value to your credit card experience.

• Stay Informed: Credit card issuers may introduce new rewards programs or limited-time offers. Stay informed about any updates or promotions to take advantage of enhanced rewards or exclusive benefits.

By avoiding common mistakes and actively seeking to maximize your credit card rewards, you can make your student credit card a valuable financial tool that goes beyond simple transaction facilitation.

Useful Links to Explore: 

• English Language Requirements for Australia
• Cultural differences you may experience in Australia
• How to find Part-Time work as a Student in Australia
• Seven Tips for Students on a Budget in Australia
• How to get a Scholarship to Study in Australia
• Driving in Australia as an International Student
• How to change your Course or Institute in Australia
• The Benefits of a Professional Year Program (PYP)
• A Complete Guide to Study in Australia
• Types of Education in Australia 
• What to Study in Australia?