Have You Thought About Getting A College Credit Card?

Just as its name would suggest a college credit card is a credit card which has been specifically designed for use by college students and is perhaps more commonly known as a student credit card. The idea behind college credit cards is that they let students learn all about handling credit 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, although a student might have had experience of using a supplemental card on a parent’s credit card account, it is the first credit card which the student will have had in his own right.

Generally speaking student credit cards work in precisely the same way as other credit cards but with a few differences which you need to know about. These differences occur because the credit card companies are taking something of a risk by extending credit to people who will usually not have any credit history and thus they need to protect themselves against 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 a responsible adult knows that the student is asking for a line of credit, and will also require that parent or guardian to stand as guarantor for the account. So, if the student defaults on the card then the parent or guardian will be required to make good on the debt.

The second major 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 typically set at between $500 and $1,000. This limit is also set at a fairly low level because the credit card companies consider this to be enough to meet the needs of most college students.

Lastly, the credit card companies also offset their risk by fixing 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 persuade them to keep their spending within the amount which they can afford to pay off every month.

On the surface college credit cards might not appear very attractive to people who are used to using normal credit cards but in fact they can be a very useful tool for teaching youngsters to handle credit responsibly and carry the additional benefit of giving student the ability to build up a good credit record, which will be extremely useful after they have finished college.

College can be a very expensive time for most students and there are not many 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 can be hard to manage and all too many students have problems coping with this and finish up with no option but to refinance their loans, usually by using student loan consolidation. When we add a college credit card into the mix we might simply be providing the straw that breaks the camel’s back.

Now, whether college credit cards are truly a good idea or merely another marketing ploy by the credit card companies is something which you must judge for yourself however, whatever your view, they are unquestionably something which must be approached with both eyes open if you are to avoid needing to seek debt assistance and repair your credit report history at some point in the future.