Have You Thought About Getting A College Credit Card?

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Have You Thought About Getting A College Credit Card?

Tuesday, September 16th, 2008 Subscribe To Our Feed

Just as its name says a college credit card is simply a credit card that has been designed for use by college students and is possibly more commonly known as a student credit card. Student credit cards are meant to let students learn all about handling credit and to experience their benefits early in their lives. Really, a student credit card is an introduction into the credit card world 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 that the student will have had in his own right.

Effectively student credit cards work in precisely the same way as other credit cards but there are some differences which you have to know about. These differences arise because the credit card issuers are taking something of a risk by giving credit to individuals who will generally have no 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 companies require that a parent or guardian co-signs the student’s card application, so that the parent or guardian is aware that the student is asking for credit, and will also require the parent or guardian to stand as guarantor for the account. So, should the student default on the card then the parent or guardian will be legally liable to make good on the debt.

The second important difference with a college credit card is that the credit limit is generally set at a lower level than that seen on other credit cards and is usually set at between $500 and $1,000. The 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.

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 putting too much on their cards and to persuade them to maintain their spending within the amount which they can afford to pay off every month.

At first sight student credit cards may not appear terribly attractive to people who are accustomed to handling normal credit cards but in reality they can be a very handy tool for teaching young people to handle credit responsibly and have the added benefit of giving student the ability to build up a good credit record, which they will find very useful once they have left college.

College can be a very expensive time for many students and there are only a few students who will make it through a college education without a mixture of parental support, grants and scholarships, federal loans, privately arranged loans and a part-time job. This is difficult enough in itself to manage and far too many students have problems dealing with this and end up being forced to refinance their loans, often through student loan consolidation. When we add a college 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 a truly good idea or just another marketing ploy by the credit card companies is something that you will have to judge for yourself but, whatever you decide, they are certainly something which must be approached with both eyes open if you are to avoid needing to ask for credit card debt help and repair your credit report history in the future.

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