Best first credit card for 2nd year student

inthezeroroom

Nasqueron said:

inthezeroroom said:

Just don’t. It’s a myth that you need a credit card in order to get further finance in the future (which you also don’t need). Use money you have to pay for stuff, and yes that includes cars. Don’t have money? Then you can’t afford it. Seriously, if someone had told me this as a second-year student then the last 30 years would have been so much better. 

You don't need it sure but it really helps and gives you the advantage of things like S75 protection and, with a better credit history, cashback cards etc. Taking finance for a car or as above, a house, is perfectly normal and reasonable, there is no reason to buy a clapped out junk car that will cost a fortune in ongoing repairs if a car can be had on finance, where it is affordable, particularly with warranty etc. Are you going to buy a tent to live in because you can't afford a house in cash? 

Section 75 protection: yeah, OK, but people hardly ever use it, let's be honest.

Cashback: what are we talking, 1%? £10 per £1,000 spent...

Taking finance for a car is normal, yes. But it's not reasonable; it's stupid. People generally don't have £30k+ for a new car (and if they do, they achieved it by not buying new cars), but they can scrape together the deposit (often on a credit card) and then make the monthly PCP payments for three years, after which they own nothing. HP is better (an unsecured loan better still) as at least you own the darn thing at the end, but you're still financing a depreciating asset. There's no reason to buy a clapped-out car either; just one you can actually afford, and then save up for the next one. But it's become 'not the way to buy a car' these days – because we're grown-ups and we're worth it.

So then, to avoid living in a tent, arguably the only form of credit anyone actually needs is a mortgage, and you don't need a credit card to get one of those either.

Sorry, I'm being pithy but you've not convinced me. 

On a more serious note, I think we need to be really careful when advising young people to take out lines of credit that they don't need for the sole purpose of building a credit history. I admit to my own lack of discipline over the years, but I'm not alone. Most credit card users carry a balance and plenty get into real difficulty, with multiple cards, endless balance transfers and so on (witness the stories on this very forum). So, given that the perks are rubbish, and Section 75 protection only covers single purchases over £100, then if you are disciplined enough to pay a credit card off every month then why not simply make the purchases outright in the first place?

Nasqueron

enthusiasticsaver said:

I recommend you do not get a credit card in Uni unless you can be very disciplined about using it.  Building up a credit score is not something you need to think about now. 

Building up a credit score is of course not something you ever need to think about.

Building up a credit history is no bad thing - being on the property ladder 2-3 years earlier might save money, better car deals etc

Nasqueron

inthezeroroom said:

Nasqueron said:

inthezeroroom said:

Just don’t. It’s a myth that you need a credit card in order to get further finance in the future (which you also don’t need). Use money you have to pay for stuff, and yes that includes cars. Don’t have money? Then you can’t afford it. Seriously, if someone had told me this as a second-year student then the last 30 years would have been so much better. 

You don't need it sure but it really helps and gives you the advantage of things like S75 protection and, with a better credit history, cashback cards etc. Taking finance for a car or as above, a house, is perfectly normal and reasonable, there is no reason to buy a clapped out junk car that will cost a fortune in ongoing repairs if a car can be had on finance, where it is affordable, particularly with warranty etc. Are you going to buy a tent to live in because you can't afford a house in cash? 

Section 75 protection: yeah, OK, but people hardly ever use it, let's be honest.

Cashback: what are we talking, 1%? £10 per £1,000 spent...

Taking finance for a car is normal, yes. But it's not reasonable; it's stupid. People generally don't have £30k+ for a new car (and if they do, they achieved it by not buying new cars), but they can scrape together the deposit (often on a credit card) and then make the monthly PCP payments for three years, after which they own nothing. HP is better (an unsecured loan better still) as at least you own the darn thing at the end, but you're still financing a depreciating asset. There's no reason to buy a clapped-out car either; just one you can actually afford, and then save up for the next one. But it's become 'not the way to buy a car' these days – because we're grown-ups and we're worth it.

So then, to avoid living in a tent, arguably the only form of credit anyone actually needs is a mortgage, and you don't need a credit card to get one of those either.

Sorry, I'm being pithy but you've not convinced me. 

On a more serious note, I think we need to be really careful when advising young people to take out lines of credit that they don't need for the sole purpose of building a credit history. I admit to my own lack of discipline over the years, but I'm not alone. Most credit card users carry a balance and plenty get into real difficulty, with multiple cards, endless balance transfers and so on (witness the stories on this very forum). So, given that the perks are rubbish, and Section 75 protection only covers single purchases over £100, then if you are disciplined enough to pay a credit card off every month then why not simply make the purchases outright in the first place?

I'm not trying to convince you as you don't see the point, I am offering an alternative view to the OP that explains that in fact, contrary to your post, a credit card is actually a good idea, a demonstrable fact. You can dismiss free money; you can dismiss free protection for qualifying purchases and you can dismiss the idea of using credit - but that doesn't mean everyone else should.

I also wouldn't place any value in the idea that "most people" do anything based on a forum where people come for advice when they need help, as, the reality is, anyone who makes money from cards or uses S75 successfully etc wouldn't necessarily ever feel the need to register and post.

inthezeroroom

WillPS said:

OP should be free to make their own choices - it's so easy these days to stumble upon credit I don't see a potential problem with making an informed choice to take a credit facility to achieve a greater life goal (like having a better credit record and having better access to credit products when needed). Credit cards are a powerful tool and I'm not sure I subscribe to the notion you should only get one if you really need it - OP themselves can judge if they think it'd be useful or a risk and that should be sufficient.

OP should be free to make their own choices – absolutely.

However, I disagree that having a better credit record and better access to credit products is a greater life goal. The only purpose of a credit history is to enable further debt. And so if we take debt off the table entirely (making exception for a mortgage) then we won't have a credit history and won't need one. Not for a new car because we've got a paid-for car on the drive. Not for emergencies because we've got money in the bank for those, right?

I also disagree that credit cards are a powerful tool. Do you mean spending power? As in the power to spend money you don't have? I'm struggling to think of cases where that is helpful. Cash in a savings account is way more powerful.

Nasqueron

Cash in a savings account, losing money from inflation isn't as powerful as your credit card company paying for a new kitchen because you used a credit card

Why not just be clear - you are advising against a powerful and beneficial payment tool because you personally don't like credit and don't think anyone else should use it? It's not good MSE advice 

CliveOfIndia

Nasqueron said:

Why not just be clear - you are advising against a powerful and beneficial payment tool because you personally don't like credit and don't think anyone else should use it? It's not good MSE advice 

I was about to post pretty much exactly the same comment.

Ultimately a credit card can be extremely convenient and beneficial for those who are disciplined enough to use it sensibly, it can be a nightmare for those who abuse it.

It's almost like alcohol.  There are millions of people who enjoy a social drink with friends, enjoy a glass of wine with their evening meal, and never have an issue.  But there are also a large number of people who cannot limit themselves to a sensible level of drinking and end up ruining their career, their family, ultimately their own life.  Should we be advocating that nobody should ever drink any alcohol at all, ever, simply because some people abuse it?  Of course not.

The same is true of credit.  Used sensibly, there's nothing at all wrong with it.  Used recklessly, it can undoubtedly cause huge problems.

inthezeroroom

Nasqueron said:

Cash in a savings account, losing money from inflation isn't as powerful as your credit card company paying for a new kitchen because you used a credit card

Why not just be clear - you are advising against a powerful and beneficial payment tool because you personally don't like credit and don't think anyone else should use it? It's not good MSE advice 

Section 75 aside (and that is a good example of it working BTW), the only power is power to spend money you don't have, and the 'benefits' such as cashback and points are rubbish. 

I haven't exactly been unclear. However, it's not that I think other people shouldn't use credit but that they don't need to. Advising someone (especially someone with low/no income) to take out credit is not good advice, full stop.

born_again

Nasqueron said:

I also wouldn't place any value in the idea that "most people" do anything based on a forum where people come for advice when they need help, as, the reality is, anyone who makes money from cards or uses S75 successfully etc wouldn't necessarily ever feel the need to register and post.

As someone working in this area. S75 is one of the most over hyped benefits of a CC & really is rarely used, as there are chargebacks to reclaim funds. 👍

enthusiasticsaver

Nasqueron said:

enthusiasticsaver said:

I recommend you do not get a credit card in Uni unless you can be very disciplined about using it.  Building up a credit score is not something you need to think about now. 

Building up a credit score is of course not something you ever need to think about.

Building up a credit history is no bad thing - being on the property ladder 2-3 years earlier might save money, better car deals etc

Yes,  when they have a job and are earning.  We have seen way too many young people on DFW who are using credit cards before they have learnt how to budget and manage money and before long are thousands of pounds in debt.  My own two daughters worked part time through Uni and sixth form but did not apply for credit cards for several years after leaving Uni and getting established on careers.  They eventually got credit cards in their early 20s and had no issue getting mortgages or car finance. I would recommend learning to manage money first before applying for any credit.  

enthusiasticsaver

CliveOfIndia said:

Nasqueron said:

Why not just be clear - you are advising against a powerful and beneficial payment tool because you personally don't like credit and don't think anyone else should use it? It's not good MSE advice 

I was about to post pretty much exactly the same comment.

Ultimately a credit card can be extremely convenient and beneficial for those who are disciplined enough to use it sensibly, it can be a nightmare for those who abuse it.

It's almost like alcohol.  There are millions of people who enjoy a social drink with friends, enjoy a glass of wine with their evening meal, and never have an issue.  But there are also a large number of people who cannot limit themselves to a sensible level of drinking and end up ruining their career, their family, ultimately their own life.  Should we be advocating that nobody should ever drink any alcohol at all, ever, simply because some people abuse it?  Of course not.

The same is true of credit.  Used sensibly, there's nothing at all wrong with it.  Used recklessly, it can undoubtedly cause huge problems.

I don't disagree that credit cards have their place but like others I am not sure a 19 or 20 year old should be encouraged to apply for them until they have learnt budgeting discipline which the OP may well already have.  Lots unfortunately haven't. There is plenty of time for them to prove they can manage money well but doing it with their own rather than borrowed money first seems sensible.