Credit Card Blog

Should I try and get a credit card to help?

I’ve had lots of people ask me about whether a credit card is a good idea - and whether or not as a student you can easily get a credit card. The first thing to do is to talk about the advantages and disadvantages of getting a credit card.. and there are a few!

Disadvantages:

a) You’re borrowing money - and you’re going to have to pay it back. It’s easy to look at the short term and think that your need for money is the most important thing… but you have to think about the long term as well.. how are you going to pay back any money that you borrow? If you can’t pay it back you could seriously affect your credit score, and even much worse - like ending up bankrupt, with county court judgements etc against you, all of which will affect your future.

b) Unless you can pay the money back quickly you will have to pay interest on any money you borrow. This may not seem so important but if you think that a loan of £1000 at 15.9% APR paid back equally over 12 months will cost you an extra £82.. this could well be money you could spend elsewhere!

Ok… so now you know a couple of the downsides of getting a credit card whilst you are a student.

What are the advantages? (less explanation required!)

a) Access to money - always a pretty big advantage! Depending on your income level you may get offered different limits.

b) If you pay back your balances on a credit card on time then a credit card could actually help your credit rating.

c) Some credit cards have perks - for example Virgin gives you discounts on a whole range of Virgin products, from music to adventure experiences.

What you should think about.

All of this though depends on your personal circumstance and you should think of a few things:

a) Why do I need a credit card?

b) Are there other ways in which I can get access to the money I need?

c) Can I address the underlying issues?

d) If I get a credit card will I be able to pay it off?

e) What possibility is there of me getting into financial trouble?

If you’re thinking of getting a credit card and you’re a student we’d advise you to think through all these points carefully. It’s a big decision, and used well, it could help your finances massively, but used badly, it could land you in trouble..

If you are getting a credit card because you “need” money then please tthink carefully before getting a credit card. There are lots of resources on the web, and there are voluntary and charitable organisations as well as university departments that can help with debt management. If you’re getting a card because you want to have something as a backup and in case of emergencies then look round carefully and find the best deal - just be responsible and be aware of the dangers!

Good luck!

This entry was posted on Monday, August 11th, 2008 at 4:44 pm and is filed under Uncategorized.
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