Student Credit Cards - do they exist?

aris

My son is in University - 21 years old and he needs to start getting his credit rating going.  I'm thinking a credit card may be the best option as he can spend online and get S75 protection, and build his credit at the same time.  He does not work (yet - he'd like to though) - I give him a living allowance and he has some healthy savings in the bank too.  He's very sensible with money and doesn't believe in credit - but in today's world, you need a credit history and/or a credit card just to exist - like rent a house, or a car while on holiday.

So - do student credit cards exist?   I'm happy to sign surety for it, and even a low £250 or £500 limit is quite fine to start with.  Thing is - I can't seem to find any cards which do not require you to move your current account too.  He currently banks with Barclays.

Any ideas?

inthezeroroom

Here are my thoughts. Feel free to ignore. I have one at uni, another going this year and a third a couple of years behind that. My advice has always been NO to the overdraft, NO to credit cards, NO to phone contracts (beyond monthly SIM-only deals), NO to car loans/PCPs, in fact NO to any form of credit. If you want something, then save up and pay cash. The only borrowing you will (probably) actually need is when buying a house, and if your lender won't offer a mortgage because you don't have a credit card, then find one that will (or ask them to send it to manual underwriting based on your income and the fact you have no other debt...). We have to stop this culture of debt and I'm starting with my own kids. Just say NO! As I say, feel free to ignore!

aris

Thank you for your response.  I think it really depends on the kid.  My son is very good with money - in fact he is cash positive in his savings and I trust him to do the right thing.   He wants to travel (when all this crap dies down) and you pretty much need a credit card for that.  Debit cards are too dangerous with regard to theft and any section 75 protections.  I don't see credit cards as a way of borrowing money, but as a useful tool for spending money - with bills paid in full every month.

GrumpyDil

And remember that managing a credit card will help show potential lenders that he can manage credit when applying for a mortgage.

aris

GrumpyDil said:

And remember that managing a credit card will help show potential lenders that he can manage credit when applying for a mortgage.

Right - that's how this silly game is played.  You need to get some small credit early on to show that you can manage big credit in the future.  You have to start somewhere.  Preferably not some dodgy pay-day loan.

inthezeroroom

aris said:

He wants to travel (when all this crap dies down) and you pretty much need a credit card for that.  Debit cards are too dangerous with regard to theft and any section 75 protections.

Fine, so take a look at pre-paid credit cards for travel. Section 75 protection is a fair point, but there is Chargeback protection on debit cards and pre-paid credit cards.

aris said:

You need to get some small credit early on to show that you can manage big credit in the future.  You have to start somewhere.

I would challenge the whole assumption that you need to manage credit at all. If you don't have the money then you can't afford it, right? I realise I'm being controversial and that this is anathema in this modern world, but please think twice before encouraging your kids into consumer debt.

aris

inthezeroroom said:

aris said:

You need to get some small credit early on to show that you can manage big credit in the future.  You have to start somewhere.

I would challenge the whole assumption that you need to manage credit at all. If you don't have the money then you can't afford it, right? I realise I'm being controversial and that this is anathema in this modern world, but please think twice before encouraging your kids into consumer debt.

It isn't debt if you pay it off at the end of each billing cycle.  Credit cards are a tool.

inthezeroroom

aris said:

It isn't debt if you pay it off at the end of each billing cycle.  Credit cards are a tool.

And the moment it's not paid off, you have debt. We're all great at handling money and paying off our credit cards... until we're not. Section 75 protection and the annoying case of car rental deposits aside, credit cards' only function is to allow borrowing, and I just don't think that's a tool you need. Again, if you don't have the money then you can't afford it.

I know I'm being idealist, but isn't it better to start out assuming that consumer credit (not mortgages, which are hard to avoid, and student loans, which should be considered a graduate tax anyway) will not feature in your life rather than assuming that you have to have it in order to get more later on?

aris

inthezeroroom said:

aris said:

It isn't debt if you pay it off at the end of each billing cycle.  Credit cards are a tool.

And the moment it's not paid off, you have debt. We're all great at handling money and paying off our credit cards... until we're not. Section 75 protection and the annoying case of car rental deposits aside, credit cards' only function is to allow borrowing, and I just don't think that's a tool you need. Again, if you don't have the money then you can't afford it.

I know I'm being idealist, but isn't it better to start out assuming that consumer credit (not mortgages, which are hard to avoid, and student loans, which should be considered a graduate tax anyway) will not feature in your life rather than assuming that you have to have it in order to get more later on?

Thing is he does have the money - the credit card is just a tool he is using to his own advantage.  Clearly you don't like them - which is fine. 

inthezeroroom

aris said:

Thing is he does have the money - the credit card is just a tool he is using to his own advantage.  Clearly you don't like them - which is fine. 

Please don't think I'm trying to be all holier than thou. I've had credit cards for 30 years. I've used and abused them all my adult life, and still I fail to see any advantage. If you pay them off every month then what's the point? Their only function is borrowing, and expensive borrowing at that.

aris

inthezeroroom said:

aris said:

Thing is he does have the money - the credit card is just a tool he is using to his own advantage.  Clearly you don't like them - which is fine. 

Please don't think I'm trying to be all holier than thou. I've had credit cards for 30 years. I've used and abused them all my adult life, and still I fail to see any advantage. If you pay them off every month then what's the point? Their only function is borrowing, and expensive borrowing at that.

For me the point is:

I get cashback on all my spend

I have S75 protection on all my spend

It is more convenient than cash

It is safer than cash - and safer than a debit card.

It allows me to book hotels, hire cars, airline tickets - many of which require credit card pre-auth.

I have no other debt - so it keeps my credit history ticking along.

But that's just me - everyone has their own reasons.