Search:

Credit cards for students - are they a help or a hindrance?

Debt and credit cards have become an inevitable part of a
modern UK student's life. With graduate debt running at an
average of over £13,000, it is easy to see the appeal of
gaining the ability to spread the day to day living costs,
putting them off until that high paid post college job
appears.

Visit most University Freshers Fairs and it will be easy
to find several different banks offering student financial
services, alongside Virgin and Barclaycard student credit
cards,all with low introductory rates, shopping discounts,
free CDs, or other new gift idea.Despite having a low irregular
income and no credit history, students represent an ideal
target for the banks. The reasons that students are desirable
as new customers is that over their working lifetime graduates
earn on average of £400,000 more than non-graduates UK, combined
with the fact that once they have accounts in place, people
are generally reluctant to switch to other providers, and so
by attracting students early in their financial life, they are
liable to remain with the same credit card provider for life.
Obtaining a student credit card can also be of great benefit
to students, not only by assisting with the daily budgeting,
but also by initiating the creation of a credit history that
can be used to support future loan and mortgage applications.
There are drawbacks however, and it is however important to
be remember not to abuse these newly obtained credit facilities,
as any credit obtained will always need to be repaid and building
up a poor credit history can prove damaging to future finance
applications.

It should be noted that students are not restricted to just
choosing a student credit card, however as some standard
credit cards do not require the applicant to maintain a minimum
regular income, however there is generally little or no difference
between the cards themselves, and the various free extras combined
with the ease of obtaining a student credit card rather than a
standard one, frequently make student targeted cards a better
option.

With online fraud protection, travel assistance, online account
management, 24 hour helplines and free text alerts set up to
notify when payment dates are due, the beneficial reasons for
students to obtain a card are numerous, and as long as care is
taken to not over use the facilities and repayments are met,
then a credit card can provide a useful flexibility for their
personal finances.

An important point to remember whenever taking out any form of
finance is to take the time to compare as many of the currently
available deals that are available. With a little care and a simple
check on the suitability and interest rates which will be payable,
using free credit card comparison services like Moneynet can help
to minimise the potential repayment costs involved in the future
as well as maximizing the various benefits.

Disclaimer:

All information contained in this article, is for general
information purposes only and should not be construed as
advice under the Financial Services Act 1986.

You are strongly advised to take appropriate professional
and legal advice before entering into any binding contracts.

Article written by Michael Hanna.