Have You Considered Applying For A College Credit Card?

Just as its name implies a college credit card is simply a credit card which has been designed for use by 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 credit cards and to experience their benefits early in their lives. Effectively, a student credit card is an introduction into the world of credit cards and, even though a student might have experienced using a supplemental card on a parent's credit card account, it represents the first credit card that the student will have had in his own right.

Effectively college credit cards work in precisely the same way as normal credit cards but with a few differences which you have to understand. These differences arise because the credit card issuers are taking something of a risk by offering credit to people who will usually not have any credit history and therefore they have to protect themselves against the higher risk of debt on college credit cards.

The first major difference is that the credit card companies require a parent or guardian to co-sign the student's card application, 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. In other words, if the student defaults on the card the parent or guardian will be required to make good on any debt.

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

Finally, card issuers also cover their risk by setting the interest rates on student credit cards a bit higher than usual in an attempt to deter students from overspending on their cards and to encourage them to maintain their spending within the amount that they can afford to pay off every month.

At first sight college credit cards might not appear terribly attractive to people who are accustomed to using normal credit cards but in fact they can be a very useful tool for teaching young people to handle credit responsibly and carry the added benefit of providing students with the ability to start building a good credit record, which will be extremely useful once they leave college.

College can be an extremely expensive time for most students and there are only a few students who will make it through a college education without a mix of parental support, grants and scholarships, federal loans, privately arranged loans and a part-time job. This is difficult to manage and all too many students have problems dealing with this and end up being forced to refinance their loans, often by making use of student loan consolidation. If we now add a student credit card into the equation we might merely be providing the straw that breaks the camel's back.

Now, whether student credit cards are truly a good idea or merely another marketing ploy by the credit card companies is something which you will have to judge for yourself however, whatever your view, they are undoubtedly something which you need to approach with both eyes open if you wish to avoid needing to ask for debt assistance and repair your credit report history in the future.