Credit cards are fraught with complications however and many of the students that end up taking them out, end up in serious financial issues as a result of it. Many students don’t understand the complicated ins and outs of a credit card in the UK and the issues and responsibilities that come with them.
Taking up a credit card can help a lot of students out in many ways, but the main issue that people face is that they need to learn how to actually manage the card and also how to actually keep the money in check and not affect their credit ratings.
What are student credit cards?
A credit card is a payment card that allows you to buy things for a loaned line of credit without cash. The amount you spend must be paid back within a certain time frame (it varies from company to company).
Student credit cards work in the exact same way, except that the loaning company will likely have specific rules and regulations in place for students.
What banks offer student credit cards?
Most banks will offer student credit cards, but they will just have different lending policies. Student credit cards at NatWest will be different from student credit cards Santander or Citibank student credit cards, but these will all have pros and cons.
Finding the best student credit cards will depend on what you personally want, so you may want to look into how to compare student credit cards before you blindly accept one.
How do student credit cards work?
Student credit cards work the same as any normal credit card does, which is that you spend money that you don’t have in your account, and you pay it back, plus a little extra.
Now, that’s a somewhat layman’s view of a credit card, but student visa credit cards work no different, same with high school student credit cards. The UK student credit cards will always be available if you know where to go.
Your credit limit is decided by a number of factors, but to begin with, it is calculated by the amount of money that you are earning.
What are the best student credit cards and can I get a credit card with no credit score?
So who has the best student credit cards? This will depend on what you're looking for, who is offering what and what your present circumstances are.
Make sure you look at secured student credit cards and make sure you read the fine print beforehand, these are situations that can breed some very nasty financial outcomes for everyone. Secured credit cards are cards that are backed by cash deposits from the cardholder. Simply put, a secured credit card allows you to have some financial security if you are suddenly unable to make any payments on your credit card.
Strictly speaking, students looking at student credit cards for poor credit, should probably steer clear, since credit cards, student or otherwise, are a breeding ground for financial woe if not managed correctly, although they can prove useful, especially for international students looking to study in the UK.
How many credit cards should college students have?
Credit cards should be managed depending on your needs and dependent on what the benefits of the card itself are. Student credit cards are dangerous things to get wrong, so it’s worth bearing that in mind as well.
Even with low APR student credit cards, you will have to judge the needs that you have accordingly, don’t just be taken in because the deal looks good, make sure you evaluate your needs first, even if there are good student credit cards with rewards.
For those that are looking into studying abroad, then student travel credit cards are a good option for you as well.
This is a score that determines your ability to pay off certain items. A credit score or credit rating is often used when making large purchases on credit or finance.
For example, if you’re buying a car on finance, then your ability to pay for the car in affordable monthly repayments will be based purely off of the score you have on your credit file. You can damage your credit severely by missing payments, being unable to repay money used on a credit card or by straying too far into your student overdraft. Your credit score is linked to your personal bank account and to any credit cards that you have too.
When taking out a credit card, you are able to set yourself a limit on how much you can spend. Most students set themselves a limit of roughly £5,000 – although some credit cards do have the ability to go all the way up to £20,000.
We recommend that you don’t take out a credit card with that sort of limit on it. If you take out a credit card that has that sort of limit it will be very difficult for you to actually control your spending, especially when you effectively have an endless supply of money available for you. Many students are aware of this because of having to take out student finance.
What you have to remember is that the amount of money that you take out on a credit card has to be paid back at the end of every month. Of course, using a credit card semi-regularly is a very good way for you to be able to build out your credit file and furthermore increase your overall credit score.
One of the things to be aware of when purchasing any items with a credit card and Section 75 protection that cost over £100 means that your credit card company will also refund you if anything goes wrong with the product, this covers most things like repairs, the retailer that you bought the item from going bust, non-delivery of the product, a cancellation and also fraud.
A credit card is a payment card that allows you to buy things for a loaned line of credit without cash.
A credit file is a collection of information and data about your borrowing and about your repayment activities throughout. A credit file is particularly important as it contains all of the information that allows your credit score to be determined.
When you do eventually apply for a loan or for finance on a product or service, the financial institution will then check your credit file to see whether you’re eligible for credit or finance based on your current credit risk score. The best thing to do, to make sure that you don’t default on payments, is to make sure that you’ve got a good offer available for what you’re looking for, look at some student discounts, and you may even be paying you less.
Section 75 Protection
Section 75 is legislation that is put in place by credit card companies, the legislation offers protection for any and all items or services that valued from £100 all the way up to £30,000. This only covers transactions in which the deposit or indeed the whole purchase was made with a credit card, this does not apply to debit cards, as there other rules, legislation and help involved to help people with debit card issues.
Purchases that are under the £100 or are over the £30,000 thresholds are not eligible for consideration or cover under this rule.
Your credit limit is decided by a number of factors, but to begin with, it is calculated by the amount of money that you are earning. You are unable to take out a high limit credit card if you are not earning enough money to support it.
You can increase and decrease your credit card limit, but this has to be approved and is also judged on a number of different factors.
A credit score or credit rating is often used when making large purchases on credit or finance.
Financial Ombudsman Service
The Financial Ombudsman Service is designed to help settle any disputes that have arisen between consumers and any UK-based businesses that are providing some sort of financial service. The service only covers UK-based business and it is unable to help with companies based abroad, the Ombudsman typically deals with companies or organisations such as banks, building societies or insurance companies. All cases are dealt with free of charge, however, businesses are charged after they use the service twenty-five times.
Using services like the Ombudsman service is fraught with difficulty, however, the service is a regulatory body and cannot necessarily make laws or rules that restrict people, however, they are able to get things for people, such as:
- Apologies from the offender
- Return of any relevant documents
- Attempt to right any wrongs that have been committed
- Refund or reduce any and all the legal fees
- Pay out any relevant compensation to an individual if they have lost out or have been badly treated up to that point
Be very careful when getting involved with credit cards or with anything that can potentially damage your credit rating, be sure to consider all of the best options open to you and make sure that you are not being taken advantage of and keep a list of the relevant contact numbers that you need if you were to run into any difficulties.
If you’re a first year at university, you need to take a lot of care too, as this may be your first year in having to manage your money this way, you need to make sure that you’re budgeting for your first year at university.