The best credit cards on offer for students

There are some instances, such as travel or an emergency, when it is handy to have a credit card as a back-up to a cash card and a debit card.

With most credit cards you need an income when you apply and often the income needed is more than most university students earn.

There are only two credit cards that target students: Westpac's Student Visa and Commonwealth Bank's Low Fee Student Credit Card, according to RateCity's database of more than 200 personal credit cards.

RateCity chief executive Damian Smith, says both cards waive annual fees while you are studying, which is good. But not so good are the high interest rates. Westpac charges 20.45% on purchases and cash advances.

The CBA's rate is 20.24% on purchases and 21.74% on cash advances.

"Provided you are paying off the card in full every month, then this interest rate issue won't directly affect you - but one miss on repaying will make for an expensive source of credit," says Smith.

Students should look for a card with reasonable rates. The average purchase rate for cards with income criteria of up to $20,000 is 16.39%, although they start from 10.49%, says Smith.

Also you should only be paying a low annual fee - or none at all. Smith says that out of these cards, the typical annual fee starts at $15 a year and there are 27 cards with none.

Students should avoid a card offering rewards or other incentives.

"Rewards programs often come with higher rates and fees and you typically need to spend at least $12,000 per year on your card as well as pay off your balance every month for it to be worthwhile," he says.

Smith recommends students should keep credit card use to a minimum - perhaps only for emergencies or travel.

Also keep the credit limit low and don't take up offers to increase it.

Always pay off the balance in full each month. If you forget to pay the minimum, it can hurt your credit record and could restrict your ability to take out a loan down the track.

Avoid using your credit card for cash advances.

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