You just got your student account with your bank and they've given you an interest free overdraft of anything up to two thousand pounds, and a credit card to go with a low interest rate. But what happens when you still need more money?

Credit cards are fast becoming a status symbol, a must have accessory and that bit of plastic might even help you make ends meet. When you don't have a job and you need cash fast, credit is a fast way to get the cash you need at low interest rates, you might even find transferring your debt from another credit card to a new one saves you hundreds of pounds in interest fees. Here's puffta's quick guide to understanding credit and debit cards.

What is a credit card?

A credit card allows you to borrow money from a financial institute that feels you can afford the repayments and have a good credit rating. You could be offered credit from anywhere between two hundred pounds and fifty thousand pounds depending on your own personal circumstances. You can spend up to this limit, or just spend what you feel comfortable with. Each month you'll receive a statement from the issuing institute with all of your transactions, and what you owe (the debt you owe back to the card). You have the option of paying back either the minimum amount which is usually five to ten percent of the card balance (the amount you owe). Each card has its own APR (the amount of interest annually you have to pay back). A good card will have a low rate such as 9.9% or up to about 15% is the high street average. Some cards have lower interest rates but these are usually offered to the higher end of the market, rather than students or young people.

Failing to pay the minimum amount each month could mean you have extra charges added to your account and that your card is declined at the checkout. If you only pay the minimum the vast majority of that will be interest rather than any of the money you've actually spent. A good rule if can only manage the minimum is to pay the minimum plus any interest that has been charged that month. That way you'll pay off the card quicker.

Many credit cards have added incentives, such as 0% for nine months on balance transfers and even purchases, giving you extra time to pay off the debt before you have to start paying interest. When you apply for a credit card, NEVER lie on the application form. Every time you apply for credit, be it for a credit card, a new phone contract, even for store cards and loans a credit check is carried out. All the information is passed to companies such as Experian or Equifax and checked for fraud, your address, your date of birth and also other commitments (other credit cards, loans etc etc) are also checked. If you pass, you'll be offered credit. Though these companies also register fraud and also credit cards and loans that you have missed payments on or have defaulted on (not paid, and don't intend to pay). You can check what these companies hold about you by clicking the Experian and Equifax links on the related links bar.

For those who pay off their credit card in full each month, you don't pay any interest and you might also be rewarded with cash back at 0.5% or 1% of your spending power, membership rewards, offers and invites to events, which sometimes make the card you've got hot property!

Get a Credit Card...

Puffta has teamed up with Accucard & Decision Fianance to offer Puffta readers the chance to apply for the Accucard credit card. With 0% on balance transfers, or even a low interest rate forever, you can tailor this card exactly how you want it. Maybe you have a big balance from another card and you want a low balance transfer rate for the whole of the balance, or maybe you want to go shopping but don't want to pay huge interest rates, then this is the card for you. Apply today and get a decision in sixty seconds, online, while you wait! If you'd like an American Express click the banner and you'll be given quotes for American Express and also other Cards from Decision Finance who also offer Personal Loans... Quotes are FREE and won't be recorded on your credit file.

What is a Debit card?

A debit card issued by your bank, has no interest to pay, and won't put you in debt unless it's attached to an overdraft. A debit card such as Solo, Switch, Visa Electron, takes the money out of your bank almost immediately when you make a purchase. If you have an overdraft you may pay interest on the amount you owe, but most student accounts offer an INTEREST FREE overdraft, check out HSBC for a great student deal.

Some debit cards actually borrow the money from a lender. These are called CHARGE CARDS and those cards you see with AMERICAN EXPRESS on them are charge cards. Usually these cards have no limit at all, but you MUST pay the balance off each month. American Express also offer a Blue and Gold credit card, though you must earn over and in the ranger of £12,000 and £20,000 to get both of these cards! Don't worry, one day you'll have that PLATINUM AMERICAN EXPRESS... Celebrities usually carry the Centurion Card, but its invite only!