Credit card for Students?(12 Posts)
Yay or nay? Today at school, dd was advised to get one to build her credit history.
Sounds like bad advice to me. I don't have one and have never had any problems with my credit history. I work at a Uni and regularly see students who are struggling with debt... It's bad enough that they are juggling student loans and overdrafts, but this is often what tips the balance.
I've told her not to. I believe if she wants to start a credit rating she could take over her mobile phone contract. She has plenty of time when she starts work to get a credit card, and can pay it off!
I've told her we pay off our credit card every month in full, we only really use it for bigger items for the extra insurance. She said her teacher said that too, but I pointed out, realistically, how many large purchases would she make, we would be paying for those!
I think it's disgusting that the school were encouraging them to do this, credit with no means of paying it back. Just too tempting for a student, even my dd who is fairly savvy with money.
I had one, never had any issues. Though the credit limit was too small (only £500) so I ended up getting a regular credit card too.
I only used it for the same things you do - purchases over £100, deposits on things like hotel rooms and car rentals.
It really depends on your DD's attitude to money. If she's the same as me - use a credit card for things you were going to buy anyway, that you can afford - then I think it's quite sensible. If she would be tempted to spend money that she doesn't have, then avoid.
I wouldn't be angry at the school. It isn't an absurd suggestion.
The suggestion that you consider building a credit rating is a good one. How you do it is another matter. DS took over his mobile contract when he turned 18. He had flat rental contract in his second year of university, and probably, now he is in his third, ought to consider a credit card.
However you only going to build a good credit record if you use such a card responsibly. Building up debts with it, will have the opposite effect.
We were thinking it would be a good idea for DS1, also a third year. He only has a cheap PAYG phone so that's not an option. He is very careful with money and financially aware so no worries on that score. My concern is that he might be turned down having no credit history to start with? Does anyone have suggestions for the best card for a student to apply for?
Squirrills, if he has a student bank account, they'll often offer a student credit card with it. They tend to have smaller credit limits than normal cards.
Yes, more like £500. My older children all had them at university.
We advised our DDs not to have a credit card at university. They don't need one and DD2 would have ended up just using it like extra cash and would have spent her credit. She actually told the bank she did not want one
Yes, they will build her credit history - but only if she is good enough at managing her money to be able to pay it off in full each month.
Personally I'd leave it until second year when they've generally curbed some of the excesses that come when they leave home (as well as paying for the basics they all need like a duvet and cutlery) and have learned to manage their money better.
My DS got one with his HSBC student account. He has an inheritance so likely to want to buy a house fairly soon after uni, so we advised him to have it, along with his phone contract, to build his credit hisotry.
He is very sensible generally, and uses his debit card for most things. He uses CC only for train fares, either home or to see friends, so max £10-15 a month, sometimes none. He has a DD set up to pay it directly from his Lloyds account, in which he has his earnings from his sixth form job. As far as I know (have been filing his bank info when he is away) he has only used it as above.
DD almost 17 would prob not be as careful, but she is likely to not go away until 19, so will hopefully have developed a bit more money sense by then!!
My dd got one last year (2nd year) to help her credit score. She was on (paid) placement at the time so I was confident she could afford it. It is also useful for internet purchase. I spoke to her beforehand about making sure it was paid off in full every month. She is now working very part time (1 day per week) so has to be careful. Her one is a Tesco card with £250 credit limit which isn't too much, and she gets rewarded with tesco vouchers. She used them to get railcard cheap and a few meals out. As long as it is used responsibly it is a win win.
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