With graduate debt averaging over £12,000, the
ability to spread the cost of further education using a student credit
card is obviously attractive. Adding to their appeal is the fact that
these cards are relatively easy to obtain. Unlike many standard credit
cards, they are available to people who do not have a regular, minimum
income and credit history. They often come with tempting offers
including low rates for an introductory period, shopping discounts and
free CDs. Flexing student plastic has the additional benefit of
creating a credit history that can be used to support future loan and
mortgage applications.
So, with no regular income and credit history,
what exactly is the attraction of students for the credit card
companies? Well, the fact that graduates can expect to earn, on
average, £400,000 more over their lifetime than the national average,
means that financial institutions are eager to attract this extra
earning potential. Banks and credit card providers know that the
general public are reluctant to go through the hassle of changing
accounts, so by attracting students early in their career, they are
likely to stay with them for life.
Student credit cards can have drawbacks. If
balances are not paid off in full each month, most cards aimed at
students notch up higher interest charges than their regular
counterparts. These additional charges often cancel out the benefits of
store discounts or free CDs. Credit cards aimed at those in further
education may not attract the useful bonuses that regular plastic does,
for example air miles, cash back on purchases and interest-free
periods.
For details on the latest offers available to
students, please visit: http://www.1st-uk-credit-cards.co.uk/student_cards.html
Credit cards aren’t free money. Flashing plastic
creates a debt that must be managed alongside the repayment of tuition
fees, bank overdraft and student loan repayments. Handled well, a
student will benefit in the future from a good credit rating. Managed
poorly, students may end up with a bad history that will adversely
affect subsequent credit applications.
It’s also important to note that some standard
credit cards do not require the holder to have a minimum regular income
or credit history. Students working part time and holiday jobs may earn
enough to apply for a range of standard cards. So, it is important for
students to check out all suitable credit card deals, not just the ones
aimed at people in further education.
A little research before signing on the dotted
line can really pay off. By taking the time to compare the deals
available on all suitable credit cards, interest repayments can be
minimised and the benefits of holding a card maximised. And that really
is good news for students.
Phil Edwards is a Business analyst in the city of
London, freelance writer for several finance magazines and websites and
co-owner of http://www.1st-uk-credit-cards.co.uk
and http://www.1st-uk-loans.co.uk.
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