For the majority of students, leaving home to go to university is the first time in their lives that they will be completely responsible for their finances.
With the rising cost of higher education in the UK the average graduate leaves university owing around £23000 in the form of loans and overdrafts.
And, even discounting tuition fees, it can be all too easy for young adults to rack up huge amounts of debt by not having the knowledge or maturity to handle their money appropriately, leaving many people asking the question of whether it’s advisable for a student to take out a credit card on top of their other debts.
After all, learning to handle money and building up a good credit score is an essential step on the road to adulthood and the earlier they learn to look after their cash, the higher their chances of leaving university with a debt that’s manageable.
When trying to find the best card for your circumstances it may be a good idea to utilise a price comparison website such as Moneysupermarket as this is a straightforward way of seeing exactly what products are available
Although credit is getting harder to come by nowadays, banks generally view students as a worthwhile risk as they are seen as being more likely to be earning higher wages in the future compared to someone who hasn’t got a degree.
Many banks also offer incentives on student credit cards in the form of discounts, shopping vouchers and even cash back on purchases but a degree of caution needs to be exercised as these ‘rewards’ can be a smokescreen to hide higher interest rates.
In addition, a lot of these discounts can be obtained with a student card so use the internet to look at credit cards which have the lowest rates of interest and the longest interest free periods rather than those with introductory offers which do nothing but encourage more spending.
You might find that the majority of cards for students have very low credit limits but don’t be put off by this asit’s actually a really good way for young adults to learn how to use their credit wisely.
Furthermore, if £200-£300 is blown on a credit card this does not mean that irreparable damage has been done as this can be paid back a lot easier than if the credit limit is £1,000.
So credit cards may be useful for students as, if they are used to teach young people about responsible spending and how important it is to make those payments on time and pay off the balance before it starts to accrue interest you will be setting them up for life.
