Student credit cards - best deals available in 2014
It might seem like a terrible idea to take out a credit card as a student.
After all, it's when we first learn to manage our finances, so being given the opportunity to spend beyond our means is fraught with danger.
Certainly, if you have a poor track record with budgeting, then student credit cards are not for you.
However, if used responsibly and paid off in full every month, they can offer two key benefits.
Building a better credit history
First of all, a credit card offers you additional security on bigger purchases than a normal current account or debit card would.
That's because Section 75 of the Consumer Credit Act states that, if there is a problem with your purchase (for example, if it's lost, damaged or stolen) and the seller refuses to deal with it, you can go direct to your credit card provider and claim a refund.
Second, and more important, is the fact that it allows you to build up a good credit score. It might seem counter intuitive, but in order for a lender to trust that you are reliable borrower (and thus someone they'll offer their cheapest loans, credit cards and mortgages to) they want to see that you have successfully borrowed money before.
So by using a student credit card to pay for things you were going to buy anyway and then clearing the debt immediately, you are boosting your credit score and showing lenders you are a low risk borrower.
Three things to remember
As we said at the start, a credit card definitely isn't for everyone. They could lead to severe debt problems if not used properly. So make sure you follow these three tips:
Never use it to withdraw cash. Cash advances incur a fee and will start racking up interest – at a higher rate – right from day one.
Never be tempted to buy something you wouldn't normally. Keep within your budget so that you can...
...always pay your balance in full each month. Fail to do this and the interest will start mounting up.
What cards are on offer?
Unlike with student current accounts, the benefits on student credit cards are pretty thin on the ground.
Most high street banks will offer a student card of some sort. The Halifax Student Credit Card charges no annual fee and offers weekly updates to help you keep track of your spending (like we said, not many benefits...)
Likewise, the HSBC Student Credit Card offers 24-hour worldwide assistance as well as a credit limit of up to £500.
So you're unlikely to get many, if any, benefits. But remember, you're (responsibly) using the credit card for protection on purchases and to improve your credit score.
Read more articles about student finance
Should I let my child have a student credit card?
Is a student overdraft of £3,000 acceptable?
Need a student loan? How to apply
