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Credit Cards and Students

With rocketing tuition fees and a general rise in costs of living, today’s students and recent graduates are under a lot of financial pressure.

Understanding how credit cards work and how to overcome the struggle in paying off credit card debt can help make life easier.

What are the advantages of a credit card?

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If you are studying at university, there are a number of advantages to having a credit card as an additional tool to help you stay on top of your finances.

For instance, when it comes to making a major purchase, such as a laptop, or a tablet device, you might not have all the funds available to pay for it in full upfront. Paying by credit card will enable you to spread the payments into smaller more manageable chunks over time.

There a number of other advantages to using a credit card, as opposed to using cheques or debit cards, with one of them being payment protection. If your goods are faulty, fail to arrive or the seller goes out of business, you are protected under the 1974 Consumer Credit Act, Section 75 on purchases made on your credit card between £100 and £30,000.

Plus, some credit cards also offer cashback or rewards like shopping loyalty points and even days out.

Why would you want a credit card?

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Though it might seem logical to assume that it's best to avoid any kind of borrowing, it is not always possible to do this.

Provided you use a credit card sensibly and try to clear your balance as often as possible, using one can help you build up a credit history. This is useful when you leave university and need to apply for a mortgage or another type of loan. In order to make lending decisions, lenders like banks and building societies need to be able to look at your track record when it comes to paying off debt.

People who have no credit history as well as those with a poor credit history may therefore find it harder to access these facilities.

By starting to build up a credit history, while you are a student, it could be a bright move provided you use your credit card wisely and pay off outstanding balances regularly.

Improving your credit score

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Whether you’re about to start your life at university, in the middle of it, or have recently graduated, you may already have a credit card – or at least been offered one by your bank.

If you have been using your credit card carefully and paying off any outstanding balances, then well done!

If you have built up substantial debt on your credit card, then you could switch to one that offers 0% balance transfer. These types of credit card allow you to switch over your total existing balance to them. You'll then stop paying interest on your debt for a set time period.

As student credit card advice goes, this is a smart option if you're determined to pay off your debt. With a transfer and no additional interest to worry about, a disciplined attitude towards repayment will help you achieve your goal with as little hassle as possible.

It is however, worth noting to avoid doing this too often as continuously transferring rather than paying the sum off can have a detrimental effect on your credit score.

Top tips on how to use and manage a credit card

If you're a student about to get hold of your first credit card then there are some key points to remember that will help you stay out of trouble and set you on the right path to financial health.

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    Always aim to pay off your full balance each month. This approach requires discipline but will ensure you're not hit with any interest and will also boost your credit rating, helping you to find even better credit deals in the future.

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    If you are ever struggling to pay your monthly balance though, then always make sure you at least meet the minimum repayment - not only does a missed payment mean extra charges, it can also lower your credit score.

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    Try not to use your credit card to withdraw cash. This is the most expensive way to use a credit card as this typically has a higher interest rate than purchases.

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    Always read the terms and conditions. If you have no experience of using credit cards it is important to really understand how best to use it, which means paying close attention to the charges involved and knowing what they mean for you.

  5. Check your credit score and access your credit report. This is because a poor credit score can indicate to you that you could be excluded from the best credit cards out there.

To discover your credit score today, join MyCreditMonitor for a 30-day free trial that will give you access to your credit report plus other features to help you take control of your finances.

Check my credit score

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Knowing your credit score is in fact something that everybody should be aware of when considering credit cards. A poor credit score can be an indication to you that you could be excluded from the best or even mainstream credit cards. To discover your credit score today, join MyCreditMonitor for a 30-day free trial. Our free trial will give you access to your credit report plus other features to help you take control of your finances.

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If you would like to know what your credit score is and the very best ways on how to improve your score, simply click the button below now to get started.

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