Securing a credit card while on a good salary before becoming a student in September?

harrybear_1988

Hi there,

I am new to credit cards and, having seen my parents' struggle with debt I am very wary of any major type of loan or credit.
So far I have avoided it by using an interest free graduate overdraft and borrowing £2000 from my parents to pay for a rent deposit, which I am paying back as quickly as I can.

At the moment I earn around £25,000 ish PA from a variety of jobs. In september it is likely I will be a student again, and be paid a tax free bursary of £15,000 PA by the University (not student loan, its a private study stipend for doing a PhD and teaching classes for free) It's going to be tough to live on as my travel expenses will be disgusting and I just know that as soon as an unexpected bill pops up - most lilkely a car repair bill - I will be up poop creek without a paddle.

So, I was thinking about getting a credit card as a back up (will put it in a bowl of water and freeze it to avoid temptation) - should I apply now while my income looks reasonable? And would a tax free bursary count as income on a credit application? I'm thinking not, but I don't really know.

Any advice appreciated

jason1231972

harrybear_1988 wrote: »

Hi there,

I am new to credit cards and, having seen my parents' struggle with debt I am very wary of any major type of loan or credit.
So far I have avoided it by using an interest free graduate overdraft and borrowing £2000 from my parents to pay for a rent deposit, which I am paying back as quickly as I can.

At the moment I earn around £25,000 ish PA from a variety of jobs. In september it is likely I will be a student again, and be paid a tax free bursary of £15,000 PA by the University (not student loan, its a private study stipend for doing a PhD and teaching classes for free) It's going to be tough to live on as my travel expenses will be disgusting and I just know that as soon as an unexpected bill pops up - most lilkely a car repair bill - I will be up poop creek without a paddle.

So, I was thinking about getting a credit card as a back up (will put it in a bowl of water and freeze it to avoid temptation) - should I apply now while my income looks reasonable? And would a tax free bursary count as income on a credit application? I'm thinking not, but I don't really know.

Any advice appreciated

When I was a student (mature, within the past decade), I'd add up my student loan 'income' and my part-time work income, and use that figure for credit applications. It wasn't as 'high' as 15k, but I didn't have any problems securing credit when necessary. In effect, when you're doing a phd, you're not a run-of-the-mill student, you're also a lecturer/researcher, or whatever. Unless self-funding, 'employment' of some sort, even in return for a modest stipend, usually enters the equation.

I'd say apply now. If you're successful and are offered a large credit limit (bearing in mind you'll drop 10k income in a couple of months), then I'd cut the limit accordingly to avoid temptation

agrinnall

I would apply now, your income isn't bad and while your lack of borrowing may mean your credit record isn't ideal at least there's nothing to count against you. Are you on the electoral roll where you now live?

I believe that a PhD bursary should count as income, but if you can get the card before you start studying again then it won't be a factor.

CLAPTON

sadly I have to say that if you think that borrowing from your parents and using an OD whether or not interest free, is 'avoiding' debt then you are seriously deluded.

if you have a car then car related costs are not unexpected they are absolutely certain.

they need to be part of your budget and you need to save up in advance so you can afford them when the time comes

and as a PhD student you will want to think about this
if you can't afford to save in advance then where does the 'spare' money come from to repay the debt?

a CC is a great aid for helping if used properly and paid in full each month; as a way of borrowing it's the road to disaster

it sounds as if you can't afford a PhD with your intended spending habit; best to change one or the other before you start

fracturedsun

You should be OK whether you apply now or after starting your PhD. I never had a problem getting credit (whether a card or OD facility) whilst I was doing a PhD (the stipend does count as income as far as most banks are concerned, just that most lenders won't take into account that it's tax free when doing their affordability calculations). Dependent of course on your exisiting credit record and relationship with your bank.

I think you may find you're better off than you think you are so long as you don't go mad with spending, not paying tax, NI or student loan really does make a difference and if you pick up any extra teaching that will also be tax free as you are unlikely to reach the threshold on taxable income.

As an aside I would recommend considering shared accomodation if you're worried about expenditure. It cuts down on expense a lot, the majority PhD students share (with other PhD students, so it's not like sharing with undergrads). Most unis have some sort of system for introducing groups of students who want to rent in groups. It can also be great fun, some of my closest friendships are with people I used to live with.

harrybear_1988

CLAPTON wrote: »

sadly I have to say that if you think that borrowing from your parents and using an OD whether or not interest free, is 'avoiding' debt then you are seriously deluded.

if you have a car then car related costs are not unexpected they are absolutely certain.

they need to be part of your budget and you need to save up in advance so you can afford them when the time comes

and as a PhD student you will want to think about this
if you can't afford to save in advance then where does the 'spare' money come from to repay the debt?

a CC is a great aid for helping if used properly and paid in full each month; as a way of borrowing it's the road to disaster

it sounds as if you can't afford a PhD with your intended spending habit; best to change one or the other before you start

Thank you to everyone for your supportive and constructive answers - they have been very helpful in mulling over ideas.

To the above poster, I understand that my current debt is debt of course, however I would argue that the interest free nature of it and my comprehensive plan of manageable repayment is significantly important when considering the detrimental effect of my current debt. The debt was unavoidable as I found myself homeless and possession- less (not to mention friendless) after a relationship break up.

My income fluctuates greatly and unpredictably month to month (one of my jobs is working on a call-out basis for a sexual assault centre, so entirely dependent on how patients the Police bring to me) so some form of borrowing for a car repair etc in leaner month and paying back in a more fruitful month would be quite handy.
I put aside money every single month for everything I possibly can afford, but my priority is paying back the bank and my parents which has to come before putting money aside for my car.

Noone can ever afford a PhD :rotfl: I've been offered a once in a lifetime opportunity of a virtually paid-for PhD and living costs (the problem being that they are never enough) and a gaurenteed £30k+ job at the end of it- I intend to grab it with both hands! I currently work mostly dead end jobs 80hours a week, often working nightshifts and dayshifts within the same 24hrs, this is the lucky break after years of hard graft.

Thanks to everyone for your imput :beer:

harrybear_1988

I would just like to add that a quiet and low paid month at the sexual assault centre is of course always the best feeling! Until you consider that perhaps it's because more people are suffering in silence....arghh. Cue ethical dilemma when discussing being paid to work in this field!

CLAPTON

harrybear_1988 wrote: »

Thank you to everyone for your supportive and constructive answers - they have been very helpful in mulling over ideas.

To the above poster, I understand that my current debt is debt of course, however I would argue that the interest free nature of it and my comprehensive plan of manageable repayment is significantly important when considering the detrimental effect of my current debt. The debt was unavoidable as I found myself homeless and possession- less (not to mention friendless) after a relationship break up.

My income fluctuates greatly and unpredictably month to month (one of my jobs is working on a call-out basis for a sexual assault centre, so entirely dependent on how patients the Police bring to me) so some form of borrowing for a car repair etc in leaner month and paying back in a more fruitful month would be quite handy.
I put aside money every single month for everything I possibly can afford, but my priority is paying back the bank and my parents which has to come before putting money aside for my car.

Noone can ever afford a PhD :rotfl: I've been offered a once in a lifetime opportunity of a virtually paid-for PhD and living costs (the problem being that they are never enough) and a gaurenteed £30k+ job at the end of it- I intend to grab it with both hands! I currently work mostly dead end jobs 80hours a week, often working nightshifts and dayshifts within the same 24hrs, this is the lucky break after years of hard graft.

Thanks to everyone for your imput :beer:

You don't have to justify yourself.

Whether or not there are good reasons, the simple fact is that interest free debt is debt and needs to be seen in that way.

I know many PhD students and at least two I know sufficiently well to say with certainty they are debt free (excluding student loans) and easily live within their means whilst having a social life, modest holidays and a car.


I wish you luck with the PhD; certainly a unique opportunity but live within your means.