Tip 3 – Borrowing Options

At 18 you’re legally allowed to borrow, and with finances often being quite tight as a student, you’ll find lots of companies will tempt you with credit! Credit is borrowed money. This could be with credit cards, loans, overdrafts or finance options. Usually when using credit, you have to pay interest on top of the money you borrow. Before deciding to borrow, you need to understand your options, and what the consequences of borrowing will be. When it comes to borrowing – follow our rules below:  

Do not borrow to cover your lifestyle. 

• Everyone likes having new clothes, going out with friends and taking vacations but it’s important to think about whether you can actually afford to allow yourself to have all the fun. You want to enjoy your Uni experience, but don’t lumber yourself with a lot of debt for things that are fun, but non-essential.  

Think about what you can actually afford to pay back.  

• It is easy to borrow and spend money but it can be much harder to pay it back. You’ve borrowed it since things are tight – so what is a realistic payback scheme? Can you pay back each month? If you get goods on finance – such as a laptop or TV, can you keep those payments up? 

When possible, do not pay back the minimum. 

• If you turn to credit cards – try and pay back more than the minimum each month. It will save you years of debt! If you have a credit card with an average APR (20%) and pay back the minimum, it will take you over 16 years to pay back the debt! Double that minimum each month and that could shoot right on down to less than two years. If you’re tempted by a credit card, use this handy repayment calculator to work out the best deal for you.