Student Credit Cards - I

Introduction

So, you’ve accepted your offer and you’re off to university! Your student days promise a busy social life, the chance to develop new interests and, of course, the opportunity to study your chosen subject. You’ll be given a lot of independence – perhaps moving out of the family home for the first time – and deciding how you want to live your life. You’ll also be responsible for managing your finances.

Looking after your money is a big responsibility, and for some students it can be a constant burden. While there’s no avoiding university fees and the cost of living, by learning to manage your money you are giving yourself the best chance of graduating with both your career and your bank balance in order.

Before you rush into any decisions, it pays to be aware of the financial options available to you.

Here we outline some of the key considerations students should make when making financial decisions, particularly about choosing and using plastic cards.


Used sensibly, credit cards offer many benefits, but used

Benefits
• Free, short-term credit as long as you always pay your balance in full by the due date shown on your statement

• A safe and convenient way to pay for goods and services, particularly over the internet, by telephone or by mail order

• Protection against fraud — if you are the innocent victim of fraud you will not be expected to pay if a criminal uses your card

• Incentives for using a card such as loyalty points and cash-back, or payments to support a charity

• Convenience when travelling, as credit cards are accepted in virtually every country around the world

• Perhaps the most flexible and convenient way of borrowing money in the short term

Risks

• Can lead to unplanned levels of debt

• Can incur charges if you make late payments, miss them altogether or go over your credit limit

• Can damage your credit rating if you continually make late payments or miss them altogether

• Can cost you more and take you longer to pay off than the alternatives, particularly if you only ever make the minimum repayment

• Can make it difficult to manage your finances if you have more cards than you need

Choosing the financial products that suit you:
During the first few weeks of university it is likely that you will receive offers from local banks and building societies to set up an account, take out a loan or apply for a credit card.

Often these offers are accompanied by free gifts or incentives such as iPods, MP3 players or discounted travel cards; some more valuable than others. If you decide to open an account, it is important to choose the right one.

Studying the terms and conditions and key features, such as overdraft limits and credit interest, may be time consuming but it’s important if you want to get the best from your bank.

For those considering the option of a credit card, think about what you need it for: is it a luxury or a necessity?

A credit card is a convenient short-term way to borrow money, usually offering a period of interest free credit. But if you’re thinking about borrowing money for more than a few months then you might want to consider a personal loan.

Remember, you have to pay back what you borrow. The golden rule is, if you can’t afford to pay it back, don’t spend it!

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