Best card for student slow stooze

moneybelle

Any recommendations of CC companies for trying to get 0% purchase card for my 18yr old, who has never has a CC before.

Cheers

Richard019

As you're talking about slow stoozing I'm assuming they're going to be working. As when I was at uni I was pretty good at saving my money this would be my system (now that I know more):

1) Student bank account - tell the bank they're planning on doing a Masters degree rather than a standard 3 year one. - It'll make no difference to the overdraft they can get but they'll set the course completion date for a year later than if it's a 3 year course. They can always get it shortened later on if they decide a 3 year one is enough. Get the maximum 0% overdraft they'll let them have.

2) Student loan (from slc) - take as much as they can. Don't worry about it as it doesn't show on credit files and there are no set repayments (at present it's applied as an extra income tax on anything over 15k pa).

3) Cash ISA - this is where the loan and overdraft come in. Put the September and January loan payments into it, along with as much overdraft as you can. From April (change of tax year) they'll have 3 student loan payments (the 3rd from their 1st year and the first two from their 2nd year) to make up their allowance and that should all go in to next years ISA allowance. The money is then out of the way, reducing the temptation to spend it.

I think Martin calls it deficit banking rather than stoozing, but other than the overdraft thanks to the way it's repaid all this money can be used when leaving uni as a deposit for a flat/house, where as stooze pots are best kept as available income in case future promotions are unavailable and the credit needs repaying.

If they've got all that in place then stoozing is an option, and I would suggest that fast stoozing with a card capable of SBT's is the best way to go.

Slow stoozing at 6% will give you 3% (even spending means over the year would put the average balance at 1/2 the limit) which after tax (as they're working) would be 2.4%.

Fast stoozing at 6% will give you 4.8% after tax, minus the initial 3% fee, so 1.8%. In this process they would live off their earnings as and when they got them.

Whilst that's a lower profit margin, I think for a student it is the better way to go as the money can be put away to one side and basically forgotten about, where as to slow stooze they really need to be disciplined. It is possible to do a combination of the two.

For a slow stooze I would suggest speaking to the bank they have their student account with. They may be able to get a deal out of them more easily than from elsewhere. Other than that, I don't know if they have a purchases offer at the moment but HSBC gave me a surprisingly large limit (considering my earnings and available credit) on a 12 month deal earlier this year.

For a fast stooze I would suggest MBNA as they tend to give big limits fairly early in people's credit history.

In both cases it is vital that the balance be paid off before the date, particularly if fast stoozing with MBNA as they have a nack of jacking up people's interest rates when offers are ending.

moneybelle

Thanks for your post; and spending all that effort writing advice that I will be able to give her for reference. :beer:

Richard019

No problem, there's one other benefit I forgot to mention about the stashing the loan/overdraft, if she decides she doesn't like it at uni she can leave without having a debt and nothing to show for it.

It's not an avenue you would have as your desired course of events, but it's worth bearing in mind that if there's a real debt there she may feel trapped. If there's no debt then the worst it can be is a waste of time, and if there's one positive thing she can take from it then it's not even that.