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.