Have You Considered Applying For A College Credit Card?

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

In general terms college credit cards work in precisely the same way as normal credit cards but with a few differences which you need to understand. These differences arise because the credit card issuers are taking something of a risk by giving credit to individuals who will usually not have any credit history and thus they have to protect themselves from the increased risk of debt on college credit cards.

The first main difference is that the credit card companies require a parent or guardian to co-sign the student's application for a card, so that the parent or guardian is aware that the student is asking for a line of credit, and will also require the parent or guardian to stand as a guarantor on 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 other credit cards and is typically set at between $500 and $1,000. This limit is also set at a reasonably low level because the card issuers consider this to be adequate to meet the needs of the vast majority of college students.

Lastly, card issuers also cover their risk by setting the interest rates on college credit cards a bit higher than usual to try to deter students from overspending on their cards and to persuade them to keep their spending within the amount which they can afford to pay off each month.

On the surface student credit cards may not appear terribly attractive to those of us who are accustomed to handling normal credit cards but in reality they can be a very useful tool for teaching young people to manage credit responsibly and have the additional benefit of providing students with the ability to start to build up a good credit record, which will be extremely useful after they have finished college.

College is a very expensive time for a lot of students and there are only a few students who will make it through college without a mixture of parental support, grants and scholarships, federal loans, privately arranged loans and a part-time job. This can be difficult enough in itself to manage and far too many students have problems dealing with this and end up with no option but to refinance their loans, usually through 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 a truly good idea or merely another marketing ploy by the credit card companies is something which you must judge for yourself but, whatever your view, they are unquestionably something which you need to approach with your eyes wide open if you wish to avoid having to ask for debt assistance and repair your credit report history in the future.