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| Credit cards for students - are they a help or a hindrance |
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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.
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