Did You Know That You Can Have A College Credit Card?

As its name would suggest a college credit card is a credit card that has been designed for use by college students and is possibly better known as a student credit card. The idea behind student credit cards is that they let students learn all about handling credit and to experience the benefits of credit cards early in their lives. Really, a college credit card is an introduction into the world of credit cards and, even though a student could have experienced using a supplemental card on a parent’s credit card account, it is the first credit card that the student will have had in his own right.

In general terms college credit cards operate in exactly the same way as ordinary credit cards but there are a few differences which you have to know about. These differences occur because the credit card companies are taking something of a risk by giving credit to individuals who will often not have any credit history and thus they need to protect themselves from the higher chance of debt on college credit cards.

The first major difference is that credit card companies require that a parent or guardian co-signs the student’s application for a card, so that a responsible adult is aware that the student is asking for credit, and will also require that responsible adult to stand as guarantor for the account. Therefore, should the student default on the card the parent or guardian will be legally liable to make good on any debt.

The second main difference with a student credit card is that the credit limit is usually set at a lower level than that seen on other credit cards and is frequently fixed at between $500 and $1,000. This limit is also set at a relatively low level because the credit card companies consider this to be high enough to meet the needs of the vast majority of college students.

Finally, card issuers also cover their risk by fixing the interest rates on college credit cards a little higher than usual in an attempt to deter students from putting too much on their cards and to persuade them to maintain their spending within the sum that they can afford to pay off every month.

On the surface college credit cards might not seem very attractive to people who are used to using normal credit cards but in fact they can be a very handy tool for teaching youngsters to manage credit responsibly and have the additional benefit of giving student the ability to start building a good credit record, which they will find very useful after they have finished college.

College can be a very expensive time for many students and there are very few students who will make it through college without a mix of parental support, grants and scholarships, government loans, private loans and a part-time job. This is difficult enough in itself to manage and far too many students have problems coping with this and end up with no option but to refinance their loans, usually through student loan consolidation. When we add a college credit card into the mix we could merely be providing the straw that breaks the camel’s back.

Whether or not student credit cards are truly a good idea or merely another marketing ploy by the credit card issuers is something which you will have to judge for yourself but, whatever your view, they are without question something you must be approached with both eyes open if you wish to avoid needing to ask for help with debt problems and repair your credit report history in the future.

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