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

As its name implies a college credit card is simply a credit card which has been designed for college students and is perhaps 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 their benefits early in their lives. In reality, a student credit card is an introduction into the world of credit cards and, although a student could have experienced using a supplemental card on a parent's account, it is the first credit card that the student will have had in his own name.

To all intent and purpose college credit cards operate in precisely the same way as other credit cards but there are a few differences which you have to understand. These differences occur because the credit card issuers are taking something of a risk by extending credit to people who will frequently not have any credit history and thus they need to protect themselves from the higher chance of debt on college 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 knows that the student is applying for credit, and will also require that parent or guardian to stand as guarantor for the account. Therefore, if the student defaults on the card the parent or guardian will be legally liable to make good on the debt.

The second major 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 generally fixed at between $500 and $1,000. This limit is also set at a relatively low level because the card issuers consider this to be adequate to meet the needs of most college students.

Finally, the credit card companies also cover their risk by fixing the interest rates on student credit cards a bit higher than usual to try to stop students from putting too much on their cards and to persuade them to keep their spending within the amount that they can afford to pay off every month.

At first sight college credit cards may not appear terribly attractive to those of us who are accustomed to using standard credit cards but in fact they can be a very handy tool for teaching young people to manage credit responsibly and carry the additional benefit of giving student the ability to build up a good credit record, which will be extremely useful once they have left college.

College can be a very expensive time for a lot of students and there are not many students who will make it through college without a mixture of parental support, scholarships and grants, federal loans, privately arranged loans and working part-time. This is difficult to manage and all too many students have problems dealing with this and end up having to refinance their loans, usually by making use of student loan consolidation. If we add a college credit card into the equation we might merely be providing the straw that breaks the camel's back.

Now, whether student credit cards are a truly good idea or just another marketing ploy by the credit card issuers is something which you will have to judge for yourself however, whatever you feel, they are without any doubt something you must be approached with your eyes wide open if you wish to avoid having to seek debt assistance and repair your credit report history at some point in the future.