Reasonable credit card for 19 year old student

Teh_User

Hello everyone, it's been a while since I've read here.

Basically I'm a first year student and I've been living off my student loan quite comfortably since September. My financial situation was very good until November when I wrote off my car and ended up with less than expected due to a sneaky young driver excess (I know, I should have read, but they were by far the cheapest to drive with at the time of getting the quote). Because my car costs considerably less than public transport due to the sheer amount of long distance travel with luggage I do on a weekly basis and poor, infrequent and expensive public transport at home, I had to dip into some of my student loan to sort out another car sharpish. That's all been solved now and I've done all of the maths and checked everything out and worked out I can afford the insurance (same as before). However, the massive chunk I had to take out to buy the car has left me a lot less breathing space.

Because of this, I'm pondering getting a credit card for 2 reasons, the first being it will help build up my nearly non existent credit rating (only a phone contract, car insurance payments and a student bank account overdraft with Lloyds TSB) and to restore the breathing space should any more unexpected costs come up. I'm also looking to get a part time job to get extra income as well, but the job market in the city basically dried up in September when all of the other students arrived so it could take a while.

My current financial status is that I'm living off the full Maintenance Loan and Grant, and receive a bursary of £1500 from my University. This totals about £7500 a year. As well as this, I have an interest free student overdraft of £500 from Lloyds TSB (extendable to £1,000 from April). I'm normally very careful with budgeting anyway. I ponder for weeks over whether I want the most basic item of clothing and manage to enjoy a healthy diet on about £10-£15 a week. I go out infrequently (thrice a month at most) and avoid expensive taxis by using the late night bus with the other students.

I'm currently looking at the Lloyds TSB Student Credit Card as the first option, but I'm wondering if my credit rating is good enough for it as I'm worried about getting into the rejection spiral. Vanquis have also been sending me letters offering me their cards for a while, but I'm put off by the high interest rates and the opportunity to do better with the 19.9% APR rate of the Lloyds TSB card.

Any advice on where to go next? :j

camuk81

Try the Lloyds card first, you have a running history already as long as there aren't lots of returns or problems and regular income Lloyds will be better. Vanquis can charge up 59.9% APR

Teh_User

I should clarify that I've been in my overdraft since December 10th due to buying the car, but I'll be well in credit from January 9th once again. The main troublesome expense is the extortion of student halls unfortunately. I don't get a choice where I live from the University as it's randomly allocated, so I have to pay up or leave. Using an overdraft isn't much of a problem I assume, as long as I don't exceed the limit? I still have space before I do that.

I've been reading up and did notice Vanquis charge the 59.9% APR. If I get the Lloyds one I think I'll reduce my insurance payments slightly as the credit company I'm with for that is rather expensive (39.9% APR itself) which ends up adding £100 a year to the bill and using the Lloyds one to get rid of a portion (£200) would kill off just a bit of that interest due to the lower APR.

CLAPTON

bad idea if you intend to use the card to actually borrow money and pay interest

but anyway try your bank with the student a/c first

Teh_User

CLAPTON wrote: »

bad idea if you intend to use the card to actually borrow money and pay interest

but anyway try your bank with the student a/c first

It wouldn't be to borrow money and pay interest except in a real emergency. It would just be for general spending, of which I'd pay off in full each month. The insurance idea is simply an idea for now. Put simply, it's for financial security in case something comes up.

ViolaLass

Teh_User wrote: »

It would just be for general spending, of which I'd pay off in full each month.

If you stick to that then the interest rate is irrelevant.

Teh_User

ViolaLass wrote: »

If you stick to that then the interest rate is irrelevant.

Of course, but I obviously want the lowest interest rate should I need to borrow anything in an emergency and need a couple of months to pay it back. Because of the structuring of student payments I usually get rid of sums I owe in large chunks and then have to only pay the minimum for a short while.

Hydromancer

I would suggest applying for the Halifax student credit card. You do NOT need a student account with Halifax to apply. I have practically the same credit history as you and still managed to get a positive response instantly online. Note that I applied to them after being refused an HSBC student credit card on account of being like £80 overdrawn (I have a £1000 interest free overdraft with them) and was told after they ran a credit check that I was declined because I was overdrawn with them. Interestingly, I was accepted for a Capital One Progress card as well...all applications made in the same month.

Edit: That Halifax card easily has the lowest APR among all the student credit cards @ 17.95%. Have you used the MoneySupermarket Smart Search tool to determine your chances of being accepted for various credit card. It runs a "soft" search so doesn't affect your credit rating

eloiseh

Due to the lloyds overdraft being interest free until you leave university (mine is, i'd assume your student account is the same) I would strongly recommend the following:

Pay off your overdraft on the 9th, get and use a credit card to build up your credit rating (paying it off in FULL each month) and in the case of emergencies that may take you a month or two to pay off use your over draft. You'll avoid paying interest that way but have the security of a safety net.