Ask the Experts – Managing loans and debt


Is there good debt and bad debt for a student? I’ve had letters from parents outraged that
their son or daughter has been offered a credit card when they’re only a student and actually
it can be quite a good idea for them to have a credit card as long as they know how to
manage it. Because as long as they’re paying it off every month or at least making the
minimum repayment. You know the credit cards available to students they get low credit
limits but it’s a way of helping them build their credit score so that once they’re graduated
they’ve got a better credit score already in place which will mean that they then have
access to more competitive loans if they need it. If they understand and can learn about
how to manage the good debt and take advantage of things like credit cards offers offered
by banks for students, and overdrafts on student bank accounts, that actually they’re not something
to be afraid of they’re just something that needs to be managed well. Look very carefully in any lending proposition
at the rate and the fees that are proposed because payday loans can be incredibly expensive.
And the other thing is, different lending products are there for different purposes
and I think it’s very important that people are clear on why they’re borrowing money and
therefore what the right solution is. So an overdraft is not designed for long term permanent
borrowing, its designed to deal with the ebbs and flows that we all have in our cash flow
and there are alternative borrowing solutions for longer term requirement, so it’s really
important that people are clear on what they need.

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