Student Credit Card Direct Debit

Gizmo247

If my daughter gets a student credit card (probably Santander) to build a credit history can it be payed in full by direct debit from my current account?

She is already a secondary credit card holder on one of my cards (Capital One, especially setup for her/my benefit) but I wondered if it is possible to switch to using her own but with the same reduced risk of being paid for by Daddy.

grumbler

Gizmo247 wrote: »

If my daughter gets a student credit card (probably Santander) to build a credit history can it be payed in full by direct debit from my current account?

Generally, it's possible, but I can imagine that some lenders can insist on the cardholder being the current account holder. No harm can be done by trying.

She is already a secondary credit card holder on one of my cards (Capital One, especially setup for her/my benefit)

How can she benefit from this except being able to use the card for her spending?

Gizmo247

grumbler wrote: »

How can she benefit from this except being able to use the card for her spending?

Yes, her benefit is free petrol for her car and no hassle getting school expenses back off me. My benefit is piece of mind.

Actually, I'm beginning to think it is a dumb question as I don't think Santander do a student credit card anymore, if ever and it is probably unwise for her to have something that she perceives as her own but which is an unlimited form of expenditure.

Probably better to keep the secondary cards going (she also has a secondary Clarity card for holiday emergencies/cash) and allow her to buy food (not booze) and other uni expenses. Then when she is a responsible member of the tax paying society she can get her own card.

thebritishbloke

You could always explain to her about having her own card that she pays off with her own money. Explain to her the risks of not paying it off, that she could get into a lot of debt etc.

Better to build up a credit history young, than when you come to get a mortgage you get told you can't.

phona

This idea seems strange to me. You're effectively letting her take as much of your money as she likes and you don't even get to see a statement...:eek:

I'm a recent graduate so I'll share the arrangement I had with my parents when I was at uni. Maybe you can adapt our model.
I rented a flat and worked out my living costs, a skeleton budget if you like. Then I discussed this with my parents and we came to a sum they would give me to live on. My dad wrote me a cheque once a month for this sum, which paid my rent and most of my other expenses (I had savings from working in the summer which made up the shortfall). Perhaps you already see the appeal of helping out without having sticky fingers in your bank account!

I had a credit card, which I put all my regular spending on. And I paid the bill myself. The responsibility was all mine - if I drank all the "bank of dad" money, it'd be gone.
Now I've graduated and have a proper job, I have a new credit card with a decent limit and am absolutely comfortable with using it just as I did as a student - I learned my lessons along the way.

I realise you're trying to help her while she doesn't have much income but financial responsibility needs to be learned and experience is the best teacher. You may find you have to bail her out, but you equally might not. And if so that will be a good lesson learned; one that wouldn't be learned taking money directly from your account.

Gizmo247 wrote: »

Then when she is a responsible member of the tax paying society she can get her own card.

This made me think when I first read it. Graduate employment rates aren't good just now. What if your daughter graduates into the dole queue? How long before she can look after her own affairs?

bundrell

phona wrote: »

This idea seems strange to me. You're effectively letting her take as much of your money as she likes and you don't even get to see a statement...:eek:

I'm a recent graduate so I'll share the arrangement I had with my parents when I was at uni. Maybe you can adapt our model.
I rented a flat and worked out my living costs, a skeleton budget if you like. Then I discussed this with my parents and we came to a sum they would give me to live on. My dad wrote me a cheque once a month for this sum, which paid my rent and most of my other expenses (I had savings from working in the summer which made up the shortfall). Perhaps you already see the appeal of helping out without having sticky fingers in your bank account!

I had a credit card, which I put all my regular spending on. And I paid the bill myself. The responsibility was all mine - if I drank all the "bank of dad" money, it'd be gone.
Now I've graduated and have a proper job, I have a new credit card with a decent limit and am absolutely comfortable with using it just as I did as a student - I learned my lessons along the way.

I realise you're trying to help her while she doesn't have much income but financial responsibility needs to be learned and experience is the best teacher. You may find you have to bail her out, but you equally might not. And if so that will be a good lesson learned; one that wouldn't be learned taking money directly from your account.



This made me think when I first read it. Graduate employment rates aren't good just now. What if your daughter graduates into the dole queue? How long before she can look after her own affairs?

agree with you

Gizmo247

Phona, thanks for sharing, very useful.

I think you are right, I need to take a more hands off approach, to be more of a help in the budgeting process and be there in case a bailout.

Things are awkward as her living expenses loan nowhere near covers her accommodation and she insisted on going self-catering too which is more expense on top, she will definitely need financial support. With being long term separated and no financial links to my ex-OH doesn't help although achieving a positive net worth last month for the first time since I was a student should put me in a better position. :-)

CLAPTON

With my children I took a similar approach to that of phona.

We worked out their expenses over the whole year (well 9 month academic year)
looked at their student loans and the timings

then worked varying monthly amounts over the nine months that would be my contribution

I encouraged them all to get a student CC but insisted / persuaded them to set up a direct debit for the full amount.

as their bank and CC statements came to our home I (with their agreement) helpful opened them and kept an eye on how they were managing.

it worked very well and they left uni with the ability to manage their own money and a beginnings of a decent credit rating.

Aquamania

grumbler wrote: »

Generally, it's possible, but I can imagine that some lenders can insist on the cardholder being the current account holder. No harm can be done by trying...

The issue is likely to be that a credit card in the name of the daughter will need to be applied for by the daughter.

The daughter cannot (legitimately) set up a DD Mandate using someone else's bank account; the account holder is the only person that can agree to a DD mandate on their account.
I've never seen an application form that allows 2 separate approvers on it i.e. one for the card applicant and another for the payer

Of course, once the card is obtained, the credit card provider won't actually care where the money to pay the bill originates from, as long as the daughter ensures it is paid. So that can be all the usual methods such as cash, cheque, by post or at a bank (post office perhaps?) or via telephone or internet banking, etc.

Whether the card holder would agree to set up a direct debit from the father's account by phone (with his permission, i.e. co-present with the daughter at the time of request), I don't know. As you say, no harm in trying ... but I'm not sure how the card provider could ensure they were talking to the genuine bank account holder???

Would such a, as others comment, "strange" arrangement (if it were to be possible) then lead to a position of father & daughter being 'financially associated'?

Perhaps father and daughter could open a joint bank account? That should overcome the issues of setting up the DD mandate with the card provider.
But it will definitely also create a case of 'financial association' between the two.

SuperHan

Gizmo247 wrote: »

Then when she is a responsible member of the tax paying society she can get her own card.

She is an adult at the moment (assuming she is a student), so she can get a card whenever she pleases.

I am an advocate of having one as soon as possible, and using responsibly to build up a credit rating (I had a student CC at 18, by 22 I had mortgaged my apartment).

My set up at uni was my parents paid my rent in to my bank a few days before it was due to come out, they came and did a food shop with me whenever they visited (which was no more than 2-3 times a year) to make sure I was stocked up on essentials, and other than that I fended for myself. I had a car, and they paid for my insurance and petrol when I went home (again, probably less than 5 times a year) I had a part time job (which I also advocate - work experience is more likely to get you a graduate job that a first in your degree), and between that and my loan, I was perfectly able to look after myself. I did drain my £1,600 overdraft, but within a year of leaving Uni I had bought myself a new £10k car and was debt free, so it did me no harm!

cautiousjon

SuperHan wrote: »

...
I am an advocate of having one as soon as possible, and using responsibly to build up a credit rating (I had a student CC at 18, by 22 I had mortgaged my apartment).

My set up at uni was my parents paid my rent in to my bank a few days before it was due to come out, they came and did a food shop with me whenever they visited (which was no more than 2-3 times a year) to make sure I was stocked up on essentials, and other than that I fended for myself. ...

I agree. I had a credit card when I was a university student at the age of 18. My credit card had a low £500 credit limit but that was all I needed because I was good at managing my money.

My parents generously paid for my tuition fees in my first and second years, in addition to giving me a few top ups over the year, and my student loan covered the rest. I was never good at asking for money but my parents insisted in giving me some a few times a year as they wanted to help. When my parents came to visit a few times a year, they would always take me to do a big shop so that I could stock up on more expensive things like washing detergent, fabric conditioner, cleaning supplies and toiletries, etc.

When the Government offered me a tuition fee loan in my third year, I decided to take it and remove my dependence on my parents. I also saved money during the previous summer so I didn't virtually any handouts. My parents would have gladly given me money but I didn't want to burden them with that, as I have two younger siblings who were also going to need supporting through university not long after I finished.

I am extremely grateful for the financial support that my parents gave me through university. I left with about £12K of debt but I will have paid it back in full via the standard PAYE contributions by early next year, which will be about 7.5 years in total. It will certainly be good when the loan is fully repaid.

It is now me who is teaching my parents things related to finances and money. Also, in a total role reversal, it is now me who is very generous with them when they come and visit. I take great pride in being able to do that.