Student credit cards could have serious effect on graduate debt,
say Gregory Pennington
Released
on: September 8, 2008, 9:21 am
Press
Release Author: Gregory
Pennington Ltd.
Industry:
Financial
Press
Release Summary: Debt management company Gregory Pennington say
the recent report on student credit card debt reflects the growing
problem of student debt in the UK.
Press
Release Body: Responding to a report suggesting that 37% of students
rely on credit cards as an additional source of finance, debt
management company Gregory Pennington (GregoryPennington.com)
commented that this echoes the growing problem of student debt
in the UK.
The
report from Halifax building society follows an NUS (National
Union of Students) poll suggesting the average student is likely
to leave university with debts of £17,500.
A
spokesperson for Gregory Pennington said: “It’s
worrying that so many students are choosing credit cards as an
option for extending their finances, although on the other hand,
it has to be accepted that fast-rising costs of living may play
a part.
“Credit
cards typically should only be used for emergency purchases, or
other purchases that can be repaid quickly. Most credit cards
carry a high interest rate, so failing to repay on time means
those debts grow far more quickly than other forms of credit.
“Students
typically only have a very low income, with disposable income
often minimal – so the temptation to make purchases on credit
cards is probably best avoided. Repaying credit card debts could
prove difficult on such a low income, and the high interest means
that the debt can grow very quickly.”
The
Gregory Pennington spokesperson said that credit card
debts make up a small part of what is a much wider problem with
student debt in the UK.
“Ever
since the Government stopped paying for tuition fees, many would-be
students have had a choice to make: become a student and land
up in debt, or go straight into work.
“Student
loan debts are not necessarily the problem, since they allow repayments
in small amounts over a long period of time. The real issue is
the pressing need for students to raise extra finances on top
of their student loans, which often takes place through overdrafts
and other forms of credit.
“But
when money is tight in the first place, many students find these
‘extra’ debts impossible to pay off on time. The problem
only gets worse if it is left until graduation – many graduates
can find their income reduced for several years because they are
repaying the debts they incurred on top of their student loans.”
The
Gregory Pennington spokesperson went on to say that students
are best advised to avoid additional credit wherever possible.
“Student loans should cover all costs, since that is what
they are designed to do. If not, many banks offer student accounts
with interest-free overdrafts, which is good in the short term,
but remember that this will have to be repaid once you have graduated,
so we advise students to consider how they plan to do that.
“Credit
cards should be seen as a last resort for students, unless they
are absolutely positive they can pay back the balance each month.
If that doesn’t happen, there’s a very real risk of
getting into unmanageable debt, and it can happen more quickly
than you might think.”
The
spokesperson also urged anyone who is concerned that they may
struggle to repay their debts to seek expert debt advice as soon
as possible. “Even if your qualifications get you a good
salary, graduate debt can still be a burden,” she said.
“The longer they are left, the bigger they are likely to
grow, so it’s essential to put a stop to that as soon as
possible.
“Some
debt solutions are only available if you have a steady income,
but if you’re in trouble, it’s still worth getting
in touch with a debt adviser for some valuable, free advice on
managing your debts. Once you graduate and go into work, though,
you should get back in touch to discuss whether any alternative
options are more appropriate.
“For
smaller debts, a debt management plan
is a good way of coming to an agreement with your creditors on
how best to repay your debts. For multiple debts, a debt consolidation
loan can reduce your monthly payments and simplify your finances
– but bear in mind you are likely to repay the debt over
a longer period of time.
“There
are also debt solutions available for more serious debts, such
as an IVA (Individual Voluntary Arrangement) for debts of around
£15,000 or higher. If you’re unsure, contact a debt
adviser for more information.”
Web
Site: http://www.gregorypennington.com
Contact
Details: Gregory Pennington Ltd.
Pennington House,
Carolina Way,
South Langworthy Road,
Salford
M50 2ZY
2009
