Credit Cards For International Students: A Complete Guide
Have you just started university in Australia? Are you wondering how to pay for all those expenses? Sometimes as a student, it can be challenging to cover costs for textbooks, rent, study supplies, travel, and more.
A student credit card can be the right solution to all your problems, helping you to pay for online purchases and cover emergency expenses. However, you need to have a financial understanding and know how to use the student credit card correctly.
In this post, we will discuss everything you need to know about getting the best student credit cards in Australia. 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.
If you use a student credit card responsibly while studying at university or TAFE and pay off your balance each month, it 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 pretty much 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 that you spend is known as your “balance," and the available amount left to use is your “credit limit.”
When using a student credit card, you will receive a credit statement each month, which will require 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. Keep in mind that you must pay the minimum repayment amount by the given due date. This will enable you to pay off the amount you spent over time. However, it is advised to make a full payment each month, 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 features of a credit card 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 that have 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. It is always better to use your credit card responsibly so that you do not have to pay interest at all.
Low Annual Fee: While some banks may exempt annual fees for student accounts, it might not be the case for credit cards. So in this situation, you need to take the responsibility to choose a card with a low fee or no annual fee. After graduating, you can keep the same credit card without making any changes to it.
Contactless Options: “Tap & Go” is the most convenient option today. Therefore, choose a card that allows you to make contactless payments so that you can simply tap for small purchases.
Complimentary Extras: Look for a student credit card that comes with additional benefits like extended warranties for some items that you want to purchase with your card or complimentary purchase protection insurance. This could be especially helpful if you are using 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 make sure that your card has an online banking option. It will help you to pay your bills and check your statement anytime you want.
Here is a list of banks that offer the best student credit cards in Australia:
After you have picked up a credit card, the next thing you need to do is apply for it. The application process hardly takes any 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 certain 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 to 18 years, you can be considered as 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.
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 in the future to apply for other forms of credit like a mortgage or loan.
Rewards: Some credit cards offer benefits such as discounts or cashback at your favourite retailers. However, you must not get swayed by it and just focus on how to make the right use of the card.
Security: Credit cards have a zero liability policy and come with their own 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 for you 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: Generally, student credit cards may have higher rates of interest. Therefore, if you do not make full payments every month, it can turn out to 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 as well as additional fees. You will also be charged with 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 repayment amount monthly, you can end up in massive debt and high-interest costs. So try to make full payments each month and avoid any kind of trouble.
Use your Credit Card Only for Essential Items: If you want to purchase something, but it is not a necessity right now, then 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 prevent 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 credit payments every month.
8. Should I 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 not applied for one yet, you can always go for a debit card that allows you to spend money you have in your bank account without the risk of running into debt.
Credit cards are designed for convenience, and they should never be considered a necessity. So whether you have a credit or not, you should altogether avoid spending money on something you cannot afford.