University life is often a time of significant personal growth and exploration, but for many students, it’s also a time of financial strain.

Nearly half (48%) of university students have faced difficulties in repaying their credit card balances in full within three months, highlighting a financial challenge for many young people in higher education. While credit cards can offer valuable financial flexibility, they can also become a source of stress for young people just beginning to manage their own finances.

What are the main reasons students may struggle to pay off their credit cards?

The increased cost of everyday expenses is the main reason students struggle to repay their credit card balances, with 33% stating this.

The increasing cost of university (31%) is also a factor, with tuition fees and maintenance loans announced to rise by 3.1% next year. Whether it's higher tuition fees or increased textbook prices, students are faced with financial pressures that can quickly add up.

The necessity to prioritise other household bills, such as rent and energy bills, also plays a role. With rent prices rising, particularly in major university towns, students may find themselves using more of their funds to cover housing costs, leaving little room for credit card repayments. Around 23% of students reported that they are forced to prioritise these essential bills over paying off their credit card balances.

The role of credit cards in students' finances

Credit cards have become an essential financial tool for many university students, with 86% of students having taken out or are considering taking out their first credit card while attending university. While credit cards can represent gaining financial independence, they also come with risks.

Despite their popularity, not all students are fully aware of the potential consequences, as 23% of students admitted they are unaware of how credit card spending can negatively impact their credit score.

Students often turn to credit cards for a variety of reasons. The desire to build a credit score is the most common, with nearly half (49%) of students citing this as their primary motivation for applying for a credit card. Over a third (38%) seek to manage their monthly spending, while 32% are attracted to the potential benefits of rewards, such as air miles or cashback. Over a quarter (27%) want to spread the cost of larger purchases, and 22% are drawn to the appeal of 0% interest rate introductory offers. Though these can offer short-term relief, they often come with conditions that students may not be aware of.

The financial decisions students make using their credit cards often reflect their unique spending needs. For example, the average student credit card user spends approximately £96 per month on rent-related expenses, £81 on clothing and shopping, and £71 on extra accommodation costs, such as furnishings. While these expenses are common among students, they can quickly add up, especially when combined with other financial responsibilities. Many students use their credit cards as a tool for managing these costs, but it is essential that they exercise caution to avoid falling into debt.