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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.