Student credit
You'll find all kind of credit on offer to students, including loans, overdrafts and credit cards. Before you get in over your head, be aware of the pitfalls and advantages of each option.
Overdrafts
Many high street banks will allow an interest-free overdraft of several hundred pounds. However, many banks are not so willing to lend following the credit crunch so don't rely on this option - make use of any grants and student loans that are available. With most banks, the overdraft is interest-free for two years after the course has been completed. They are especially sympathetic towards students who anticipate trouble before it starts, so ask for help early.
Elena's story
Elena, 22, tells us what credit she took out as a student and how she's paying it back.
For more advice on picking the best student bank account for you go to moneysavingexpert.com or moneyfacts.co.uk.
Credit cards
These should be considered a last resort. You should be aware that spiralling credit card and loan debt can seriously damage your credit rating. Also, missing repayments can mean ever-growing interest charges which risk your debt snowballing out of control. As a general rule of thumb, if you're left with no choice but to use a credit card to pay for basics like weekly groceries, you should go straight to your student advice centre and ask for financial advice and/or additional financial support. To reduce your spending you can always ask for a limited amount of credit each month. Some of the best credit card deals can be found at lovemoney.com.
Loans
The best loans are from your parents - they don't usually charge interest and may even conveniently forget you owe them anything! Loans from the Student Loans Company are the next best thing as these are repaid at a very low interest rate. For more information go to the government's Student Finance site.
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