Can Credit Cards Help Dumfries And Galloway Students Budget And Avoid Debt?

A few issues spring straight to mind should students ever have credit cards and be exposed to expensive interest rates? The answer is the same for anyone else if you are good with money and use a credit card well then you should have one. If you cannot budget and spend money on things you do not need and cannot afford with your credit card then you should not.

It certainly can be the most expensive method of borrowing.With little or no credit history the students are unlikely to have access to the best 0% deals on the market and in fact they are likely to be excluded from mainstream rates.

It can be a good idea for a student to have a credit card if they:

1. always pay it off in full – the rate in this case has no effect if there is an interst free period and it will build credit history.

2. They have a pre paid gas and electric meter installed for gas or electric payments and they cannot get it removed for lack of credit score or history.

3. Have no access to an emergency fund if something major breaks like their laptop and as they are hard pushed it isn’t insured.

Money is tight in your student days and unauthorised overdraft fees can quickly become expensive with daily charges. Bouncing a direct payment will vary between •£20 – •£30 a time avoinding these will be agreat help in budgeting.

However the benefits of this can be quickly eaten up at rates of upto 30% which may be the only type of lender to take on someone with no credit history.

If the student looks for the best prices then they will mainly be monthly deals for phone,gas and electricity. However if they are lucky enough to be able to afford their own car then it should be noted that the best and cheapest method of paying insurances is YEARLY.

Now if the student is in their second or third year and has built a nice credit score by not missing payments then they may have access to a 0% credit card say for 12 months. TIP – pay the insurance on the credit card and pay it back monthly as you would your car insurance this will save you between 10% and 20% in interest charges that most insurers will chare you to pay back the premiums loan.

Used wisely a credit card can save a student some money, used rashly it could just put them in a whole pile of trouble with paying back the interest.

The wise can use a credit card to budget. There are added benefits of building credit history which can help with future budgeting by gaining access to cheaper products that require credit history.

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