Credit cards

A number of banks and card providers now offer credit cards aimed at students, either as part of a student banking package or as stand-alone offers. They may look attractive, but before you apply for a credit card you should ask yourself if you really need one.

If you are disciplined, credit cards can be useful for emergencies, big purchases, buying goods and services on the internet or phone and when travelling abroad. But if you know you are not careful with money, they are an easy way to rack up debt.

Card providers are all too aware of their potential for abuse and try to keep a lid on things by imposing lower credit limits for students than for customers with full-time jobs. You may find your borrowing is capped at £500 or £600.

Credit cards work best if you can pay off the balance each month and you do not use them to draw out cash. Interest on cash withdrawals is high, while those on purchases are often above 10%.

In addition, some of the best deals in terms of interest-free periods and low interest rates are not available to students.

Stores cards are similar to credit cards but can only be used for purchases from one chain. They can be tempting, as they often offer a discount on your first purchase.

However, if you leave your balance unpaid at the end of each month you will pay a high price for the privilege of holding their card, so by and large they are best avoided.