Launched to coincide with the beginning of the university year, the Student Barclaycard will allow first years to borrow up to £600 straight away — up from a typical limit of £300 in the past.
The firm said it would also offer students an interest rate of 14.9% on both purchases and cash withdrawals, down from 17.9%. This is lower than the rates on specialist student cards from rivals such as HSBC and Lloyds TSB, which charge 18.9% and 17.9% on purchases and 21.47% and 17.95% on cash advances respectively. But cash advances on Barclaycard will still be subject to a 2.5% handling fee.
Consumers groups argue that students should not be borrowing on credit cards anyway, and certainly not at the start of their first term.
Frances Walker of the Consumer Credit Counselling Service, said: “Our advice to students would be to make use of the cheaper forms of credit available to them, such as student loans and interest-free overdrafts, before turning to credit cards of any kind.”
Card companies know students can get cheaper debt elsewhere, which is why they try to entice them with marketing gimmicks.
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Barclaycard is offering a 12-month interest-free loan facility to those buying a Dell Inspiron laptop using their card. The loan is paid off in interest-free instalments of £30 a month. Those who take up the offer are under no obligation to spend on their card and are also restricted to an initial credit limit of £240 because the £360 price is subtracted from the £600 limit.
James Le Brocq of Barclaycard said: “We have tried to create a card that will help students to get the most out of student life.”
Debt counsellors warn, however, that such offers are suitable only for people who are disciplined enough to resist putting any extra debt on their plastic.
Sue Edwards of Citizens Advice said: “Spending on credit cards should be avoided wherever possible.”
Students who are struggling are advised to approach their bank about increasing their overdraft above the 0% limit instead, as the rates are still likely to be lower than on a card. Barclays, for example, charges 8.9%.