To many people, the idea of providing a credit card to a student could seem wrong. After all, most of the individuals enrolled in an academic institution would have very limited financial resources. They would probably be dependent upon their parents or on borrowed funds to meet their fees and other expenses. Gaining access to credit facilities could lead to overspending and possibly the inability to meet their credit card payments when they fall due.
However, several banks in Singapore offer credit cards that have features that are specially designed for students. Using a “student credit card” provides many benefits, not the least of which is that it teaches young adults how to manage their financial commitments.
But are these cards any different from the regular credit cards offered by the banks? How easy is it to get one and what should students know about them?
1. They have low credit limits
The limit for a student credit card will be restricted to S$500.
The DBS Live Fresh Student Card has a credit limit of S$500, which is similar to the limit on Standard Chartered Bank’s Manhattan Card. In fact, every card in this category will have an identical limit.
While S$500 may seem to be a relatively small amount, it offers some advantages. It will help you to control your expenditure and reduce the probability of taking on debt that you could find difficult to repay. By placing a cap on the limit, the bank is trying to ensure that its money remains safe.
2. There is no minimum income requirement
The eligibility criteria are quite simple. You can apply for a student credit card if you are at least 18 years old and have a valid student identification card.
The bank could stipulate that you should be a student of one of an approved list of educational institutions. The Citibank Clear Card for students is available only to those enrolled at Nanyang Technological University, National University of Singapore, Singapore Management University, and several other institutes.
Although you do not need to provide proof of your income, those applicants who are less than 21 years old do need to get their parents’ permission to apply for a credit card. Does this place any financial liability on your parents? According to the terms imposed by the bank, your parents or your guardian will be responsible for paying the dues if you do not clear your outstanding balance.
3. You can get your annual fees waived
Credit cards aimed at students have very low annual charges. In most cases, you don’t need to pay anything at all as the bank may offer to waive the charges entirely. Of course, you may be required to meet certain conditions.
The following table summarises the position.
|Citibank Clear Card||S$29.96 per year||Waived for the first year|
|DBS Live Fresh Student Card||S$128.40 per year||Waived for five years|
|Standard Chartered Manhattan Card||S$32.10 per year||Waived for the first year|
|Maybank eVibes Card||S$5 every quarter||Waived for the first two years if you charge your card at least once every three months|
4. You can earn reward points and discounts
Every credit card targeted at students offers a host of concessions and freebies.
With the Citibank Clear Card, you get:
- A 10% rebate with a minimum spend of S$10 at Starbucks.
- A 5% rebate at Subway. Here too, you need to meet the minimum S$10 requirement.
- One Citi Dollar for every S$1 that you spend. These Citi Dollars or points are valid for a period of one year. The conversion rate that is applicable is S$1 for every 420 Citi Dollars or points that you accumulate. You can pay for your shopping using these points or even redeem your points for cash.
Similarly, Standard Chartered Bank’s Manhattan Card offers a 0.25% cash back on every amount that you spend at retail outlets.
The DBS Live Fresh Student Card provides users with DBS Points. You get one DBS Point for every S$5 that you spend using the card. How much are DBS Points worth? If you accumulate 3,200 DBS Points, you become eligible to receive a S$50 Takashimaya Department Store voucher. There are several other types of benefits that you can claim under the bank’s reward program.
5. Getting approved for one is simple
Every bank is eager to increase the number of credit cards that it issues. If you are a bona fide student at an approved educational institution, it should be fairly easy to get a student credit card.
Standard Chartered Bank’s eligibility criteria specify that all you need to do is to provide a copy of your NRIC or your passport to the bank along with a copy of your student ID. If you are less than 21 years old, you need to get your parents’ or your guardian’s consent. It would also be necessary to furnish a copy of their NRIC/passport in this case.
The DBS Live Fresh Student Card is available only for Singapore citizens or permanent residents. The bank stipulates that you should be between 18 and 27 years of age.
Should you get a student credit card?
Use your credit card well and it can provide you with several benefits. Paying your dues promptly will help you to establish a good credit history. This can be an invaluable asset when you need to apply for a credit card with a larger limit when you graduate and get a job.
The card will also give you the benefit of several weeks of credit. You will need to pay for your purchases only when you receive your monthly billing statement. Additionally, you will earn points and cash back amounts, although, in dollar terms, this will not add up to much as your expenditure will be quite restricted.
But don’t get a student credit card without considering its downsides. If you don’t keep up with your payments, your credit history will be negatively affected. You can also be saddled with a 25%+ annual interest rate on your unpaid balance as well as late fees.
Above all, don’t spend recklessly when you receive your first card. Many students do just this and then are unable to make the repayments that fall due. Use your card sparingly and only for the amount that you are sure that you will be able to pay back at the end of the month.
Disclaimer: All credit card information is accurate at time of writing and should only be used as a reference. For the latest promotions, benefits, and terms and conditions, please refer to the credit card companies’ respective websites.
(By Ravinder Kapur)