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    Hello,

    I heard that getting a credit card is good for credit ratings, and there are student version which offer no interest.

    My question is: could I get a student credit card and just not use it- is owning it enough to help a credit score? Are there any charges that I will get?

    I can't really find anywhere that explains this well enough, so any help is much appreciated.
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    (Original post by Wiggly)
    Hello,

    I heard that getting a credit card is good for credit ratings, and there are student version which offer no interest.

    My question is: could I get a student credit card and just not use it- is owning it enough to help a credit score? Are there any charges that K will get?

    I can't really find anywhere that explains this well enough, so any help is much appreciated.
    Just getting a credit card and not using it would not raise your credit rating as far as I'm aware, you have to use it and pay it off in full every month to build credit rating
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    I'm very unaware of how credit cards work. Are student credit cards totally free, provided that you pay the balance on time?

    Where exactly does APR come into it? What happens when you stop being a student?


    ^If the above user is reading this, I didn't quite you directly because these are general questions and I didn't want to feel as though I was directly asking you. No pressure and stuff.
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    You'd have to check the small print of any student credit card you intend to apply for.
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    Generally in the UK, unless it specifically says that you pay a monthly fee, you would only pay the interest rate on a credit card if you don't pay off the whole balance in full at the end of every month. The balance will increase each month until you pay it back. Roughly it would be the percentage of the balance as APR, divided by 12. There's also usually a minimum amount you need to pay them otherwise you can get fined around £12.

    Getting a credit card would show up on your credit record, but nothing would really happen to it unless if you use it and pay it off as the previous poster said. You don't want to not pay it off or not pay off in full very often as this could lower your credit rating if the card company chooses to report it.

    Regarding what happens when you stop being a student, you would have to read the terms & conditions to see if the card is either terminated or upgraded to a normal credit card. Also, it's worth shopping around for a credit card if you're planning on using it. A student credit card is not always the best option, you can get ones with low/no foreign exchange fees and low interest rates, as well as 0% interest for a certain amount of times (which means that you can pay for something, not pay it back in full, and no interest would accrue on it). But credit cards can be dangerous, so don't use one unless you know what you're doing.
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    There are lots of factors that a creditor might use to judge your credit worthiness. As well as having a reputable history as a reliable debtor who pays bills on time, a small contributing factor might be using a small amount of your available credit (if you're constantly using 100% of your available credit, this is an indicator that you're struggling financially). So yes, leaving a credit card and not really using it can impact your apparent credit worthiness positively.

    On the other hand, leaving the card completely unused might mean that the creditors completely ignore this, so at a minimum I'd suggest buying a kitkat each month with the credit card, then putting it in a drawer.

    If what you're most interested in is building a solid credit history, I'd suggest using your credit card as a debit card proxy and putting all of your normal transactions through it and repaying them in full, on time, every month.

    I'm very unaware of how credit cards work. Are student credit cards totally free, provided that you pay the balance on time?
    Yes, there are some pay-for credit cards, but I can't imagine any of them would be student cards. It should be pretty obvious when applying.

    Where exactly does APR come into it?
    At the end of the month you'll receive a statement of all the purchases you've made in the past month. They'll typically say something like:

    Minimum payment: £10
    Total balance: £436.20


    And you're given 40 days (or so) to make a payment on this balance. If you repay less than the total balance, you'll begin to pay APR on the remaining sum. So in this example, I might only be able to afford to pay off £200 this month, so the remaining £236.20 will begin to attract interest. Then next month, assuming I don't continue to use my credit card, the bill might be:

    Previous statement balance: £236.20
    Interest: £4.27 (at 24% APR)
    Minimum payment: £10
    Statement balance: £240.47
 
 
 
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