Credit Cards And Student Loans

Government arranged student loans are available from local education authorities. However they are not enough to fund living expenses and other costs associated with studying away from home. Students may need to look elsewhere, but it can be difficult for students to get a loan from a regular provider on the high street.

However, some lenders regard students as a reasonable risk as they should have a better chance of a better paid job after graduation. Nevertheless, loans from these providers come with higher interest rates than usual.

The actual repayment amounts will depend of the amount borrowed, the period over which the loan will be repaid and the interest rate. Ideally students should work out how much they will have to repay each month and whether they can afford it. There may be an option for repayment holidays, but student loans become repayable as soon as the money is credited to your account – there is no delay.

Another borrowing facility available to students is a ‘pay day loan’, which may be useful for topping up income for a short period. These loans give cash advances of up to a few hundred pounds and they are supposed help students until they are paid or receive student loan funds. They may be useful, but attract very high interest rates so should be used sparingly.

Students can be easily tempted to use student loan facilities but normal rules apply. A loan should only really be taken out if it is for a specific and necessary purpose – and if each month’s repayments can be made. If you fail to do that you will start to build a poor credit history which could count against you in the future when seeking other credit and a mortgage.

Most high street banks offer credit cards specifically to suit students, usually coming as part of an overall package with a bank account and an overdraft.

Student credit cards allow you to borrow money without the backing of any income, enabling you to buy books and essentials for student life until your student loan comes through. A credit card can also be useful as an emergency back-up for things like car repairs, but, again, normal rules apply: the amount spent has to be re-paid and interest on student credit cards is usually at a high rate.

Most student credit cards come with good incentives, such as discounts and special offers in some shops and on certain products, which are usually student related. Sometimes there are even free gifts. In some cases they offer insurances such as travel protection and card protection. Card providers may offer optional payment breaks throughout the year and may send text reminders to make payments.

Of course credit cards should not be regarded by students as a route to free money; they should endeavour to make at least the minimum repayment every month. However, when used properly they can be a good way to build up a good credit rating and enable students to get short term borrowing.

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