If there’s one financial product I’d suggested you try to avoid for as long as possible at university, it’s credit cards. Nothing can hurt your finances as much as a couple of grand sitting on your card steadily growing as the interest mounts up. Recent studies suggest that 43% of students have a credit card, and that number is only likely to grow as the credit culture spreads to younger generations.
What shocked me when searching for student credit cards was just how high the interest rates can be – the Halifax Student Mastercard recently claimed to be a market leader, yet it charges 17.9% APR. In fact, looking at the Motley Fool’s credit card search for student cards, despite the rate, it is one of the best cards (Barclaycard Student Mastercard has the lowest APR at 14.9%).
Of course, used carefully, credit cards can be put to good use (especially if you pay off your balance in full each month and also use them to buy products online, when you’ll get more protection than if you pay using a debit card). Luckily, all the student cards listed at the Fool seem to limit the credit amount to a maximum of no more than £600 (and with several of the cards, you can limit the amount to as little as £100). But you have to remember, that at an APR of 17.9%, the debt you build up can double in not much more time than it takes to complete the average 3 year university course.
I think it is better to sign up for one credit card which is suitable to our needs because one is more beneficial and will also get high rewards.
I would agree with trying to avoid using a credit card whilst your a student, especially if you can’t pay off the balance in full each month. It’s stagging to see how quickly the balance can grow thanks to interest.