Use our UK Finance guide and learn by experience. We outline pitfalls so that you don't have to learn the hard way, as many of us often do.
Credit Cards
Student Credit Cards
Are you responsible enough to manage your own finances? And more specifically, are you ready to manage a credit facility? These are questions you need to ask yourself, and answer honestly, before you even start looking at the various student credit card deals available to you.
What are student credit cards?
Student credit cards cater exclusively for students studying in higher education institutions. Whilst most normal credit card packages will require to you have a minimum amount of regular income before approving your application, most student credit cards will not require any form of fixed income. The catch is that student credit cards will usually attract a higher rate of interest than normal credit cards, and providers will often try to blur this scary fact by offering prospective student credit card holders special offers such as, free CD's, store discounts when purchasing with your card, etc.. In most cases you will also be required to settle your student credit card UK bill in full each month. Failing to do so will result in your interest rate being raised and late payment penalties being levied. So it really does help to be as educated as possible and to spend responsibly, remembering that when you do charge a purchase to your student credit card, you are in fact borrowing cash and will have to repay it, sooner rather than later. You will also find that although student credit cards may come with special offers as mentioned above, they will not attract the normal benefits of regular credit cards such as, cash-back on purchases, voyager miles, low-interest periods, etc..
Drawbacks to student credit cards.
Most students will have a current account with an overdraft facility in place, as well as a student loan. Adding a student credit card application to the mix means potentially holding three credit facilities at the same time, and if you don't manage to stay on top of your finances, your student credit card UK could end up costing you a lot of money as well as resulting in a poor credit record which will have further negative implications in the future.
Advantages of student credit cards.
On the other hand, if you keep your finances in check, operating a student credit card can help build a sparkling credit record which will really pay off once you've graduated and are looking to finance anything, from a car to a new house. Of course, the most notable reason for completing a student credit card application has to be that you more than likely will not have a regular, fixed income during your time spent studying and therefore, operating one of these cards can seriously help you during periods when cash is tight. So a student credit card can give you a modicum of financial freedom and allow you to focus more on your studies instead of worrying about how you're going to get through the month.
Alternatives to student credit cards.
One of the alternatives to getting a student credit card, is to shop around for a regular credit card that doesn't require a minimum amount of income, or will accept a lower level of income than normal cards. The interest rates on these cards may not be the lowest around, but they should be easier on your pocket than student credit cards, although you may find no special offers on the table. By working part-time or getting a holiday job, you should be able to find approval for cards that require a low level of income.
Summary.
So, to summarise, make sure you are ready to deal with your finances in a responsible manner and prepare yourself for a lot of shopping around before signing a student credit card application. Student credit card providers want your business because they know that you are right at the beginning of your financial life and if they get your business now, they will most probably have it until you die, so don't just accept a student , credit card because it's been offered to you. Take some time out to compare different student credit card deals, as well as normal cards you may qualify for (those which don't require high levels of regular income). Keep track of your spending habits as closely as possible and once it becomes routine, you will find controlling your finances to be a cinch instead of a nightmare.
