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By Russell Cavanagh
Staff Writer, 29 August 2008
THE best days of your life! Three, four or more years studying your favourite subject, making new friends and living the student experience! The perfect time to set up a solid financial future with a student credit card too.
What's particularly special about student credit cards?
There's so much to consider and lots to take in at the start of first year uni, poly or college: which text books to buy or borrow; how to afford a travel pass; what bits & pieces to get for your new digs; membership of clubs; financing fieldtrips as well as vacations; new clothes ... The list is seemingly endless - as is the potential pull on your limited budget.
The best student credit cards are designed to help students enjoy and manage academic life. Companies gamble that you will graduate successfully and remain loyal in your subsequent professional career. What do student credit cards offer that other credit cards do not?
Student credit card special features
First of all, there are free gifts (or "rewards") to consider on student credit cards. These can include subsidised deals with shops and restaurants or discounts on travel, cinema tickets, book clubs, wine clubs, DVD rentals ...
Travel deals would be an obvious attraction to help explore other parts of the world during vacations and extended field trips. Insurances commonly come as part of the student credit card package and you may be able to get medical cover, help getting home win the event of lost tickets or even emergency cash advances and card replacements if necessary.
But gifts should be a minor consideration and not form the basis on which to make particular student credit card decisions.
APR - the annual cost of interest, fees and all other charges associated with using credit.
The majority of student credit cards charge a higher interest rate than you might find on many mainstream credit cards. However, there are very competitive low interest rate student credit cards available if you take the time to compare student credit cards, such as the Barclaycard student credit card, which offers just 14.9% APR.
While interest rates may not always be cheap, student credit cards still come with a standard interest free period on purchases, which usually lasts for up to 56 days. This interest free period applies to purchases when you repay the statement balance in full and on time each month.
Student credit cards generally offer credit limits of around £500 to £600, and offer good budgeting flexibility without the danger of falling into large debt.
Student credit cards often have no annual fee. However, they may carry transaction fees of between 2% and 3% for cash withdrawals and additionally on foreign transactions. They usually charge - in line with mainstream credit cards - full interest that runs immediately on cash withdrawals.
Unlike debit cards, credit cards provide legal redress against faulty services or goods under s75 of the Consumer Credit Act 1974 on transactions over £100 and under £30,000.
However, student credit cards also tend to offer free, additional protection against identity theft or fraud. This may be a factor if sharing digs with strangers or if carrying out frequent purchases online.
Free online account management is a useful feature with student credit cards as is the option of telephone banking. Barclaycard even offers free text alerts five days before repayments are due – letting you concentrate on those looming project or dissertation deadlines.
What's the downside of student credit cards?
Balance transfers - e.g., moving debts from other cards or bank accounts - are not usually possible. This is understandable given student credit cards offering features only found on Platinum or other high-status cards whilst facilitating a good credit record useful in later life.
As with all cards, there will be transaction fees, interest rates and charges that will need paying off within stated deadlines – while there will be a minimum monthly payment amount, it's always advisable to pay back as much as you can comfortably afford to – and in full if possible.
Interest does tend to be slightly on the higher side of mainstream average. This isn't unreasonable given the amount of younger students applying with short or non-existent credit histories.
Again, Barclaycard student credit card performs favourably with 14.9% interest where applicable and even its cash withdrawal rate is low at 14.9%.
Which student credit cards are currently best?
At 14.9% APR and with a £600 credit limit plus a good reward package and the same cardholder services as a Platinum Barclaycard, the Barclaycard Student credit card is our top recommendation. The Natwest Student credit card / RBS Student credit card also has much to offer though with higher interest rates kicking in if you miss the 56 day full repayment deadlines.
Compare student credit cards.
Summing up
Student credit cards offer access to enjoyment and security early on in adult life. They also give a good opportunity to build a credit history that, used sensibly, will facilitate essential borrowing later in life (mortgages, etc).
If you can remain careful, a student credit card will help you enjoy those years of study and beyond.
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