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

Just as its name would suggest a college credit card is a credit card that has been specifically designed for college students and is perhaps better known as a student credit card. College credit cards are meant to allow students to learn all about handling credit and to experience the benefits of credit cards early in their lives. In reality, a college credit card is an introduction to the credit card world and, even though a student could have had experience of using a supplemental card on a parent's credit card account, it represents the first credit card which the student will have in his own name.

Effectively student credit cards operate in exactly the same way as ordinary credit cards but there are a few differences which you have to understand. These differences arise because the credit card companies are taking something of a risk by allowing credit to people who will normally not have any credit history and therefore they need to protect themselves against the increased chance of debt on student credit cards.

The first significant difference is that the credit card issuers 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 applying for a line of credit, and will also require the responsible adult to stand as guarantor for the account. In other words, if the student defaults on the card then the parent or guardian will be required to make good on any debt.

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

Lastly, the credit card companies also offset their risk by setting the interest rates on college credit cards a bit higher than usual in an attempt to stop students from putting too much on their cards and to encourage them to maintain their spending within the sum that they can afford to pay off every month.

At first sight college credit cards might not seem very attractive to people who are used to using standard credit cards but in reality they can be a very handy tool for teaching young people to handle credit responsibly and carry the additional benefit of providing students with the ability to build up a good credit record, which will be very helpful once they leave college.

College is a very expensive time for most students and there are not many students who will make it through a college education without a mixture of parental support, scholarships and grants, federal loans, private loans and a part-time job. This can be hard to manage and far too many students have problems coping with this and finish up being forced to refinance their loans, usually by using student loan consolidation. When we add a credit card into the equation we might just be providing the straw that breaks the camel's back for some students.

Whether or not student credit cards are in fact good idea or merely another marketing ploy by the credit card issuers is something that you will have to judge for yourself but, whatever you decide, they are unquestionably something you you need to approach with both eyes open if you are to avoid needing to ask for debt assistance and repair your credit report history in the future.