The Pros and Cons of plastic:
Credit Cards if managed correctly can be a good way of financing yourself in the short time whilst at university. Whether these means covering your food shopping before your next loan cheque arrives or simply fueling your 'buy now - worry later' mentality. The key with credit cards is to understand and appreciate that its not your money, and that whatever you spend you will have to repay, its your choice whether you decide to pay default charges and lengthy interest repayments on the debt.
Please find our suggested pros and cons of plastic:
Advantages
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- Cheaper for short term borrowing:
Credit cards can be cheaper than a personal loan for short term borrowing - interest is only paid on the remaining debt, not the full loan amount |
- Greater flexibility:
You only need to pay a minimum amount each month or you can pay up to the total outstanding amount. |
- No redemption penalties:
Paying off a loan early can result in redemption penalties. |
- Interest free credit period:
Typically, up to 56 days interest free credit can be obtained. |
- Remote purchasing:
Enables you to purchase products and services remotely via the internet or phone. |
- Additional benefits:
Many cards offer additional benefits such as additional insurance cover on purchases, cash back, air miles and discounts on holidays. |
Disadvantages
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- Expensive cash withdrawals:
Withdrawing cash from a cashpoint can be very expensive with fee ranging from £1.50 to 2% of the amount withdrawn. |
- Insufficient credit limit:
You may not be able to obtain as much credit as you want, and because you credit rating is based upon a score of risk, it might take months before you have built up a high enough credit rating in order to get the credit limit you are after. |
- Easier to get into debt:
Particularly for students in between lectures, Credit cards can encourage the purchasing of goods and services you cannot really afford; supporting a 'buy now, worry later' mentality. |
- Open to fraudulent use:
Using a credit card, especially remotely, introduces an element of risk as the card details may fall into the wrong hands resulting in fraudulent purchases on the card. This is especially pertinent whilst at university. |
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E-mail: Info@clearstudentdebt.co.uk