When going to university it is incredibly important that students focus on their money and their spending. One of the many ways that many students keep an eye on this is by using a credit card of some sort.
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 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 no affect their credit ratings.
A credit card is very different from a debit card. The biggest difference between a debit card and a credit card is where the money used to buy any goods or services is drawn from when someone is buying something. When using a debit card, the money used for the purchase will come directly from the user’s bank account, this is also the same for student bank accounts too (Obviously, make sure that you understand student bank accounts, too). When a person is using a credit card, however, the purchase is charged to a line of credit from the company that they got the credit card for and the user is then billed later, this is a very serious thing to consider when you’re at university, you don’t want to be in credit card debt at university, so be sure to stay on top of things if you do decide to get a student credit card.
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, students need to take this seriously, especially since many students are unable to do anything like understand student bills.
What you have to remember is that the amount of money that you take our 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 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 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. For example, if you are close to your limit every few months then you should find your limit increased or the provider of the credit card has faith in your ability to pay any money that you borrow straight back.
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 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:
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 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.
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